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SECURITIES AND EXCHANGE COMMISSION
þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware (State or other jurisdiction of incorporation or organization) | 13-3138397 (I.R.S. Employer Identification No.) | |
6 International Drive, Rye Brook, New York (Address of principal executive offices) | 10573 (Zip Code) |
Title of each class: | Name of each exchange on which registered: | |
Common Stock, $.10 Par Value | The NASDAQ Global Select Market |
None
Large accelerated filero | Accelerated filerþ | Non-accelerated filero | Smaller reporting companyo |
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F-1 | ||||||||
Exhibit 11-1 | ||||||||
Exhibit 21-1 | ||||||||
Exhibit 23-1 | ||||||||
Exhibit 31-1 | ||||||||
Exhibit 31-2 | ||||||||
Exhibit 32-1 | ||||||||
Exhibit 32-2 |
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• | The offshore energy business, formerly included in the “Marine and Energy” businesses of the Insurance Companies and Lloyd’s Operations, is now included in the Insurance Companies’ and Lloyd’s Operations’ “Property Casualty” businesses. |
• | The marine lines within both the Insurance Companies and Lloyd’s Operations are now presented as “Marine” instead of “Marine and Energy”, since the offshore energy business has now been reclassified to “Property Casualty”. |
• | Engineering and construction, European Property and other run-off business, formerly included in the “Other” category of business within the Insurance Companies and Lloyd’s Operations, are now included under “Property Casualty”. |
• | The “Middle Markets” business, formerly broken out separately in the Insurance Companies, is now included in the Insurance Companies’ “Property Casualty” business. |
Marine — Insurance Companies | • Marine liability • Bluewater hull • Brownwater hull • Cargo, specie and logistics • Protection & indemnity • Transport • Builders risk • War • Customs bonds | |
Inland Marine — Insurance Companies | • Transportation • Construction equipment • Builders risk • Jewelry, fine arts & other specialties • Commercial output policy | |
Marine — Lloyd’s Operations | • Cargo and specie • Marine liability • Bluewater hull • Marine excess-of-loss reinsurance |
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Navigators Property and Casualty (NAV PAC) — Insurance Companies | • Multi-Peril • Commercial automotive • Liability • Property • Umbrella • Inland marine • Crime insurance | |
Primary Casualty — Insurance Companies | • Construction liability • Construction wrap-up • Primary casualty • Environmental liability • Life sciences liability | |
Excess Casualty — Insurance Companies | • Excess casualty • Commercial umbrella | |
Navigators Technical Risk (NavTech) — Insurance Companies | • Offshore energy • Onshore energy • Operational engineering • Construction | |
Casualty — Lloyd’s Operations | • Bloodstock • U.S. Casualty written through Lloyd’s | |
Navigators Technical Risk (NavTech) — Lloyd’s Operations | • Offshore energy • Onshore energy • Engineering and construction |
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Navigators Professional Liability (Navigators Pro) — Insurance Companies | • Accountants professional liability • Directors & officers liability • Employment practice liability • Lawyers professional liability • Insurance agent errors & omissions • Miscellaneous professional liability | |
Navigators Professional Liability (Navigators Pro) — Lloyd’s Operations | • Directors & officers liability • Lawyers professional liability |
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Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
($ in thousands) | ||||||||||||
Net reserves for losses and LAE at beginning of year | $ | 999,871 | $ | 847,303 | $ | 696,116 | ||||||
Provision for losses and LAE for claims occurring in the current year | 444,939 | 443,877 | 387,601 | |||||||||
Decrease in estimated losses and LAE for claims occurring in prior years | (8,941 | ) | (50,746 | ) | (47,009 | ) | ||||||
Incurred losses and LAE | 435,998 | 393,131 | 340,592 | |||||||||
Losses and LAE paid for claims occurring during: | ||||||||||||
Current year | (59,412 | ) | (60,104 | ) | (46,467 | ) | ||||||
Prior years | (263,523 | ) | (180,459 | ) | (142,938 | ) | ||||||
Losses and LAE payments | (322,935 | ) | (240,563 | ) | (189,405 | ) | ||||||
Net reserves for losses and LAE at end of year | 1,112,934 | 999,871 | 847,303 | |||||||||
Reinsurance recoverables on unpaid losses and LAE | 807,352 | 853,793 | 801,461 | |||||||||
Gross reserves for losses and LAE at end of year | $ | 1,920,286 | $ | 1,853,664 | $ | 1,648,764 | ||||||
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Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||
1999 | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | ||||||||||||||||||||||||||||||||||
($ in thousands) | ||||||||||||||||||||||||||||||||||||||||||||
Net reserves for losses and LAE | $ | 170,530 | $ | 174,883 | $ | 202,759 | $ | 264,647 | $ | 374,171 | $ | 463,788 | $ | 578,976 | $ | 696,116 | $ | 847,303 | $ | 999,871 | $ | 1,112,934 | ||||||||||||||||||||||
Reserves for losses and LAE re-estimated as of: | ||||||||||||||||||||||||||||||||||||||||||||
One year later | 165,536 | 180,268 | 209,797 | 323,282 | 370,335 | 460,007 | 561,762 | 649,107 | 796,557 | 990,930 | ||||||||||||||||||||||||||||||||||
Two years later | 160,096 | 183,344 | 266,459 | 328,683 | 360,964 | 457,769 | 523,541 | 589,044 | 776,844 | |||||||||||||||||||||||||||||||||||
Three years later | 156,322 | 232,530 | 266,097 | 321,213 | 377,229 | 432,988 | 481,532 | 555,448 | ||||||||||||||||||||||||||||||||||||
Four years later | 194,924 | 227,554 | 256,236 | 334,991 | 362,227 | 401,380 | 461,563 | |||||||||||||||||||||||||||||||||||||
Five years later | 190,830 | 218,982 | 264,431 | 325,249 | 343,182 | 391,766 | ||||||||||||||||||||||||||||||||||||||
Six years later | 185,075 | 225,031 | 260,264 | 314,332 | 333,857 | |||||||||||||||||||||||||||||||||||||||
Seven years later | 188,055 | 221,541 | 257,852 | 305,051 | ||||||||||||||||||||||||||||||||||||||||
Eight years later | 187,422 | 220,045 | 250,021 | |||||||||||||||||||||||||||||||||||||||||
Nine years later | 186,581 | 213,198 | ||||||||||||||||||||||||||||||||||||||||||
Ten years later | 180,431 | |||||||||||||||||||||||||||||||||||||||||||
Net cumulative redundancy (deficiency) | (9,901 | ) | (38,315 | ) | (47,262 | ) | (40,404 | ) | 40,314 | 72,022 | 117,413 | 140,668 | 70,458 | 8,941 | ||||||||||||||||||||||||||||||
Net cumulative paid as of: | ||||||||||||||||||||||||||||||||||||||||||||
One year later | 43,301 | 53,646 | 64,785 | 84,385 | 80,034 | 96,981 | 133,337 | 142,938 | 180,459 | 263,523 | ||||||||||||||||||||||||||||||||||
Two years later | 71,535 | 91,352 | 112,746 | 133,911 | 140,644 | 180,121 | 219,125 | 233,211 | 322,892 | |||||||||||||||||||||||||||||||||||
Three years later | 88,570 | 114,449 | 138,086 | 170,236 | 195,961 | 238,673 | 264,663 | 300,328 | ||||||||||||||||||||||||||||||||||||
Four years later | 101,667 | 127,961 | 159,042 | 208,266 | 223,847 | 262,425 | 302,273 | |||||||||||||||||||||||||||||||||||||
Five years later | 108,146 | 141,384 | 185,037 | 226,798 | 239,355 | 283,538 | ||||||||||||||||||||||||||||||||||||||
Six years later | 116,752 | 159,389 | 196,098 | 234,284 | 251,006 | |||||||||||||||||||||||||||||||||||||||
Seven years later | 131,579 | 171,768 | 198,760 | 241,083 | ||||||||||||||||||||||||||||||||||||||||
Eight years later | 142,709 | 171,744 | 203,370 | |||||||||||||||||||||||||||||||||||||||||
Nine years later | 142,101 | 176,876 | ||||||||||||||||||||||||||||||||||||||||||
Ten years later | 146,798 | |||||||||||||||||||||||||||||||||||||||||||
Gross liability-end of year | 391,094 | 357,674 | 401,177 | 489,642 | 724,612 | 966,117 | 1,557,991 | 1,607,555 | 1,648,764 | 1,853,664 | 1,920,286 | |||||||||||||||||||||||||||||||||
Reinsurance recoverable | 220,564 | 182,791 | 198,418 | 224,995 | 350,441 | 502,329 | 979,015 | 911,439 | 801,461 | 853,793 | 807,352 | |||||||||||||||||||||||||||||||||
Net liability-end of year | 170,530 | 174,883 | 202,759 | 264,647 | 374,171 | 463,788 | 578,976 | 696,116 | 847,303 | 999,871 | 1,112,934 | |||||||||||||||||||||||||||||||||
Gross re-estimated latest | 429,719 | 463,960 | 529,707 | 639,674 | 698,021 | 862,260 | 1,367,835 | 1,388,088 | 1,544,672 | 1,851,667 | ||||||||||||||||||||||||||||||||||
Re-estimated recoverable latest | 249,289 | 250,763 | 279,685 | 334,623 | 364,164 | 470,493 | 906,272 | 832,640 | 767,828 | 860,737 | ||||||||||||||||||||||||||||||||||
Net re-estimated latest | 180,431 | 213,198 | 250,021 | 305,051 | 333,857 | 391,766 | 461,563 | 555,448 | 776,844 | 990,930 | ||||||||||||||||||||||||||||||||||
Gross cumulative redundancy (deficiency) | (38,625 | ) | (106,286 | ) | (128,530 | ) | (150,032 | ) | 26,591 | 103,857 | 190,156 | 219,467 | 104,092 | 1,997 |
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Consolidated | Insurance Companies | |||||||||||||||||||||||
Year | Grand | Excluding | All | Lloyd’s | ||||||||||||||||||||
Ended | Total | Asbestos | Total | Asbestos | Other(1) | Operations | ||||||||||||||||||
($ in thousands) | ||||||||||||||||||||||||
2008 | $ | 1,997 | $ | 2,926 | $ | (16,517 | ) | $ | (929 | ) | $ | (15,588 | ) | $ | 18,514 | |||||||||
2007 | 104,092 | 105,817 | 57,512 | (1,725 | ) | 59,237 | 46,580 | |||||||||||||||||
2006 | 219,467 | 220,412 | 131,443 | (945 | ) | 132,388 | 88,024 | |||||||||||||||||
2005 | 190,156 | 191,347 | 97,758 | (1,191 | ) | 98,949 | 92,398 | |||||||||||||||||
2004 | 103,857 | 87,639 | 84,639 | 16,218 | 68,421 | 19,218 | ||||||||||||||||||
2003 | 26,591 | 11,556 | 20,128 | 15,035 | 5,093 | 6,463 | ||||||||||||||||||
2002 | (150,032 | ) | (87,230 | ) | (144,804 | ) | (62,802 | ) | (82,002 | ) | (5,228 | ) | ||||||||||||
2001 | (128,530 | ) | (65,371 | ) | (117,136 | ) | (63,159 | ) | (53,977 | ) | (11,394 | ) | ||||||||||||
2000 | (106,286 | ) | (42,879 | ) | (77,340 | ) | (63,407 | ) | (13,933 | ) | (28,946 | ) | ||||||||||||
1999 | (38,625 | ) | 24,893 | (21,912 | ) | (63,518 | ) | 41,606 | (16,713 | ) |
Consolidated | Insurance Companies | |||||||||||||||||||||||
Year | Grand | Excluding | All | Lloyd’s | ||||||||||||||||||||
Ended | Total | Asbestos | Total | Asbestos | Other(1) | Operations | ||||||||||||||||||
($ in thousands) | ||||||||||||||||||||||||
2008 | $ | 8,941 | $ | 8,916 | $ | 3,079 | $ | 25 | $ | 3,054 | $ | 5,862 | ||||||||||||
2007 | 70,458 | 70,696 | 54,475 | (238 | ) | 54,713 | 15,983 | |||||||||||||||||
2006 | 140,668 | 142,685 | 104,831 | (2,017 | ) | 106,848 | 35,837 | |||||||||||||||||
2005 | 117,413 | 119,659 | 85,408 | (2,246 | ) | 87,654 | 32,005 | |||||||||||||||||
2004 | 72,022 | 74,797 | 51,083 | (2,775 | ) | 53,858 | 20,939 | |||||||||||||||||
2003 | 40,314 | 43,494 | 19,279 | (3,180 | ) | 22,459 | 21,035 | |||||||||||||||||
2002 | (40,404 | ) | (5,544 | ) | (51,720 | ) | (34,860 | ) | (16,860 | ) | 11,316 | |||||||||||||
2001 | (47,262 | ) | (12,254 | ) | (47,261 | ) | (35,008 | ) | (12,253 | ) | (1 | ) | ||||||||||||
2000 | (38,315 | ) | (3,213 | ) | (28,001 | ) | (35,102 | ) | 7,101 | (10,314 | ) | |||||||||||||
1999 | (9,901 | ) | 25,306 | (6,730 | ) | (35,207 | ) | 28,477 | (3,171 | ) |
(1) | Contains cumulative loss development for all active and run-off lines of business exclusive of asbestos losses. |
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A.M. Best | Rating | Recoverable | Percent | |||||||
Rating(1) | Description | Amounts | of Total | |||||||
($ in millions) | ||||||||||
A++, A+ | Superior | $ | 436.7 | 42 | % | |||||
A, A- | Excellent | 585.2 | 56 | % | ||||||
B++, B+ | Very good | 0.8 | 0 | %(2) | ||||||
NR | Not rated | 23.5 | 2 | %(2) | ||||||
Total | $ | 1,046.2 | 100 | % | ||||||
(1) | Equivalent S&P rating used for certain companies when an A.M. Best rating was unavailable. | |
(2) | The Company holds offsetting collateral of approximately 102.1% for B++ and B+ companies and 71.8% for not rated companies which includes letters of credit, ceded balances payable and other balances held by our Insurance Companies and our Lloyd’s Operations. |
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Reinsurance Recoverables | |||||||||||||||||||||
Unearned | Unpaid/Paid | Collateral | Rating & | ||||||||||||||||||
Reinsurer | Premium | Losses | Total | Held (1) | Rating Agency | ||||||||||||||||
($ in millions) | |||||||||||||||||||||
Swiss Reinsurance America Corporation | $ | 9.0 | $ | 97.8 | $ | 106.8 | $ | 9.2 | A | AMB | (2) | ||||||||||
Munich Reinsurance America Inc. | 26.1 | 60.3 | 86.4 | 16.2 | A+ | AMB | |||||||||||||||
Transatlantic Reinsurance Company | 21.7 | 49.3 | 71.0 | 9.5 | A | AMB | |||||||||||||||
White Mountains Reinsurance of America | 1.2 | 68.6 | 69.8 | 2.3 | A- | AMB | |||||||||||||||
Everest Reinsurance Company | 19.9 | 49.4 | 69.3 | 8.5 | A+ | AMB | |||||||||||||||
General Reinsurance Corporation | 1.5 | 58.3 | 59.8 | 1.7 | A++ | AMB | |||||||||||||||
Munchener Ruckversicherungs-Gesellschaft | 4.9 | 37.0 | 41.9 | 10.2 | A+ | AMB | |||||||||||||||
National Indemnity Company | 7.5 | 29.8 | 37.3 | 3.1 | A++ | AMB | |||||||||||||||
Platinum Underwriters Re | 4.2 | 26.8 | 31.0 | 2.6 | A | AMB | |||||||||||||||
Berkley Insurance Company | 8.1 | 21.1 | 29.2 | 1.5 | A+ | AMB | |||||||||||||||
Scor Holding (Switzerland) AG | 5.9 | 19.2 | 25.1 | 5.9 | A- | AMB | |||||||||||||||
Swiss Re International SE | 1.3 | 22.2 | 23.5 | 6.2 | A | AMB | |||||||||||||||
Partner Reinsurance Europe | 5.6 | 17.6 | 23.2 | 8.7 | AA- | S&P | |||||||||||||||
Lloyd’s Syndicate #2003 | 3.6 | 17.9 | 21.5 | 3.4 | A | AMB | |||||||||||||||
Partner Reinsurance Company of the U.S. | 1.0 | 19.6 | 20.6 | 0.1 | A+ | AMB | |||||||||||||||
Arch Reinsurance Company | 0.7 | 15.9 | 16.6 | 0.1 | A | AMB | |||||||||||||||
Hannover Ruckversicherung | 1.5 | 14.8 | 16.3 | 2.4 | A | AMB | |||||||||||||||
Ace Property and Casualty Insurance Company | 3.7 | 12.1 | 15.8 | 1.6 | A+ | AMB | |||||||||||||||
Allianz Global Corporate & Specialty AG | 0.2 | 14.4 | 14.6 | 4.2 | A+ | AMB | |||||||||||||||
Federal Insurance Co. | 0.6 | 10.7 | 11.3 | 1.0 | A++ | AMB | |||||||||||||||
Top 20 Total | 128.2 | 662.8 | 791.0 | 98.4 | |||||||||||||||||
All Other | 34.1 | 221.1 | 255.2 | 80.9 | |||||||||||||||||
Total | $ | 162.3 | $ | 883.9 | $ | 1,046.2 | $ | 179.3 | |||||||||||||
(1) | Collateral includes letters of credit, ceded balances payable and other balances held by our Insurance Companies and our Lloyd’s Operations. | |
(2) | A.M. Best |
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Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
($ in thousands) | ||||||||||||
Invested Assets and Cash | ||||||||||||
Insurance Companies | $ | 1,604,354 | $ | 1,509,382 | $ | 1,421,365 | ||||||
Lloyd’s Operations | 388,556 | 356,184 | 301,790 | |||||||||
Parent Company | 63,677 | 52,149 | 44,146 | |||||||||
Consolidated | $ | 2,056,587 | $ | 1,917,715 | $ | 1,767,301 | ||||||
Net Investment Income | ||||||||||||
Insurance Companies | $ | 65,717 | $ | 63,544 | $ | 58,261 | ||||||
Lloyd’s Operations | 9,229 | 11,655 | 10,524 | |||||||||
Parent Company | 566 | 1,355 | 1,877 | |||||||||
Consolidated | $ | 75,512 | $ | 76,554 | $ | 70,662 | ||||||
Average Yield (amortized cost basis) | ||||||||||||
Insurance Companies | 4.1 | % | 4.3 | % | 4.5 | % | ||||||
Lloyd’s Operations | 2.7 | % | 3.4 | % | 3.9 | % | ||||||
Parent Company | 1.0 | % | 3.1 | % | 4.9 | % | ||||||
Consolidated | 3.8 | % | 4.1 | % | 4.4 | % |
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• | actual or anticipated variations in our quarterly results of operations, including the result of catastrophes, |
• | changes in market valuations of companies in the insurance and reinsurance industry, |
• | changes in expectations of future financial performance or changes in estimates of securities analysts, |
• | issuances of common shares or other securities in the future, |
• | the addition or departure of key personnel, and |
• | announcements by us or our competitors of acquisitions, investments or strategic alliances. |
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2009 | 2008 | |||||||||||||||||||||||
High | Low | Close | High | Low | Close | |||||||||||||||||||
First Quarter | $ | 57.58 | $ | 45.30 | $ | 47.18 | $ | 65.01 | $ | 50.91 | $ | 54.40 | ||||||||||||
Second Quarter | $ | 49.75 | $ | 42.80 | $ | 44.43 | $ | 56.99 | $ | 47.23 | $ | 54.05 | ||||||||||||
Third Quarter | $ | 56.29 | $ | 43.59 | $ | 55.00 | $ | 66.74 | $ | 43.46 | $ | 58.00 | ||||||||||||
Fourth Quarter | $ | 57.64 | $ | 45.83 | $ | 47.11 | $ | 60.50 | $ | 39.29 | $ | 54.91 |
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![](https://capedge.com/proxy/10-K/0000950123-10-018083/c96822c9682201.gif)
Base | Cumulative Indexed Returns | |||||||||||||||||||||||
Period | Years Ending December 31, | |||||||||||||||||||||||
Company / Index | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | ||||||||||||||||||
The Navigators Group, Inc. | 100 | 144.84 | 160.01 | 215.88 | 182.36 | 156.45 | ||||||||||||||||||
S&P 500 Index | 100 | 104.91 | 121.48 | 128.16 | 80.74 | 102.11 | ||||||||||||||||||
S&P 500 Property & Casualty Insurance | 100 | 115.11 | 129.93 | 111.79 | 78.91 | 88.55 |
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Annual Return Percentage | ||||||||||||||||||||
Years Ending December 31, | ||||||||||||||||||||
Company / Index | 2005 | 2006 | 2007 | 2008 | 2009 | |||||||||||||||
The Navigators Group, Inc. | 44.84 | 10.48 | 34.91 | -15.52 | -14.21 | |||||||||||||||
S&P 500 Index | 4.91 | 15.79 | 5.49 | -37.00 | 26.46 | |||||||||||||||
S&P 500 Property & Casualty Insurance | 15.11 | 12.87 | -13.96 | -29.41 | 12.21 |
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Number of | ||||||||||||||||
Shares | Dollar Value | |||||||||||||||
Total | Purchased | of Shares that | ||||||||||||||
Number | Average | Under Publicly | May Yet Be | |||||||||||||
of Shares | Cost Paid | Announced | Purchased Under | |||||||||||||
Purchased | Per Share | Program | the Program (1) | |||||||||||||
($ in thousands, except per share) | ||||||||||||||||
January 2008 | — | — | — | $ | 30,000 | |||||||||||
February 2008 | 30,202 | $ | 54.66 | 30,202 | $ | 28,349 | ||||||||||
March 2008 | 105,824 | $ | 53.58 | 105,824 | $ | 22,679 | ||||||||||
Subtotal first quarter | 136,026 | $ | 53.82 | 136,026 | ||||||||||||
April 2008 | 50,000 | $ | 49.90 | 50,000 | $ | 20,184 | ||||||||||
May 2008 | — | — | — | $ | 20,184 | |||||||||||
June 2008 | — | — | — | $ | 20,184 | |||||||||||
Subtotal second quarter | 50,000 | $ | 49.90 | 50,000 | ||||||||||||
July 2008 | 38,728 | $ | 44.51 | 38,728 | $ | 18,460 | ||||||||||
August 2008 | — | — | — | |||||||||||||
September 2008 | — | — | — | |||||||||||||
Subtotal third quarter | 38,728 | $ | 44.51 | 38,728 | ||||||||||||
Total December 31, 2008 | 224,754 | $ | 51.34 | 224,754 | $ | — | ||||||||||
(1) | Balance as of the end of the month indicated. The stock repurchase program adopted in October 2007 for up to $30 million expired on December 31, 2008. |
Number of | ||||||||||||||||
Shares | Dollar Value | |||||||||||||||
Total | Purchased | of Shares that | ||||||||||||||
Number | Average | Under Publicly | May Yet Be | |||||||||||||
of Shares | Cost Paid | Announced | Purchased Under | |||||||||||||
Purchased | Per Share | Program | the Program (1) | |||||||||||||
($ in thousands, except per share) | ||||||||||||||||
October 2009 | — | — | — | $ | 35,000 | |||||||||||
November 2009 | 29,021 | $ | 47.30 | 29,021 | $ | 33,627 | ||||||||||
December 2009 | 112,555 | $ | 47.83 | 112,555 | $ | 28,243 | ||||||||||
Subtotal fourth quarter | 141,576 | $ | 47.72 | 141,576 | ||||||||||||
Total December 31, 2009 | 141,576 | $ | 47.72 | 141,576 | ||||||||||||
(1) | Balance as of the end of the month indicated. |
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Year Ended December 31, | ||||||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
($ in thousands, except per share data) | ||||||||||||||||||||
Operating Information: | ||||||||||||||||||||
Gross written premiums | $ | 1,044,918 | $ | 1,084,922 | $ | 1,070,707 | $ | 970,790 | $ | 779,579 | ||||||||||
Net written premiums | 701,255 | 661,615 | 645,796 | 520,807 | 380,659 | |||||||||||||||
Net earned premiums | 683,363 | 643,976 | 601,977 | 468,323 | 338,551 | |||||||||||||||
Net investment income | 75,512 | 76,554 | 70,662 | 56,895 | 37,069 | |||||||||||||||
Net realized gains (losses)(1) | (2,660 | ) | (38,299 | ) | 2,006 | (1,026 | ) | 1,238 | ||||||||||||
Total revenues | 762,880 | 683,666 | 676,659 | 526,594 | 385,219 | |||||||||||||||
Income before income taxes | 86,848 | 68,731 | 139,182 | 106,617 | 33,754 | |||||||||||||||
Net income | 63,158 | 51,692 | 95,620 | 72,563 | 23,564 | |||||||||||||||
Net income per share: | ||||||||||||||||||||
Basic | $ | 3.73 | $ | 3.08 | $ | 5.69 | $ | 4.34 | $ | 1.74 | ||||||||||
Diluted | $ | 3.65 | $ | 3.04 | $ | 5.62 | $ | 4.30 | $ | 1.73 | ||||||||||
Average common shares outstanding (000s): | ||||||||||||||||||||
Basic | 16,935 | 16,802 | 16,812 | 16,722 | 13,528 | |||||||||||||||
Diluted | 17,322 | 16,992 | 17,005 | 16,856 | 13,657 | |||||||||||||||
Combined loss & expense ratio(2): | ||||||||||||||||||||
Loss ratio | 63.8 | % | 61.0 | % | 56.6 | % | 57.7 | % | 69.6 | % | ||||||||||
Expense ratio | 33.4 | % | 32.8 | % | 30.9 | % | 30.1 | % | 31.7 | % | ||||||||||
Total | 97.2 | % | 93.8 | % | 87.5 | % | 87.8 | % | 101.3 | % | ||||||||||
Balance sheet information (at end of year): | ||||||||||||||||||||
Total investments and cash | $ | 2,056,587 | $ | 1,917,715 | $ | 1,767,301 | $ | 1,475,910 | $ | 1,182,236 | ||||||||||
Total assets | 3,453,994 | 3,349,580 | 3,143,771 | 2,956,686 | 2,583,249 | |||||||||||||||
Gross losses and LAE reserves | 1,920,286 | 1,853,664 | 1,648,764 | 1,607,555 | 1,557,991 | |||||||||||||||
Net losses and LAE reserves | 1,112,934 | 999,871 | 847,303 | 696,116 | 578,976 | |||||||||||||||
Senior notes | 114,010 | 123,794 | 123,673 | 123,560 | — | |||||||||||||||
Stockholders’ equity | 801,519 | 689,317 | 662,106 | 551,343 | 470,238 | |||||||||||||||
Common shares outstanding (000s) | 16,846 | 16,856 | 16,873 | 16,736 | 16,617 | |||||||||||||||
Book value per share(3) | $ | 47.58 | $ | 40.89 | $ | 39.24 | $ | 32.94 | $ | 28.30 | ||||||||||
Statutory surplus of Navigators Insurance Company | $ | 645,820 | $ | 581,166 | $ | 578,668 | $ | 524,188 | $ | 356,484 |
(1) | Includes Net other-than-temporary impairment losses recognized in earnings. | |
(2) | Calculated based on earned premiums. | |
(3) | Calculated as stockholders’ equity divided by actual shares outstanding as of the date indicated. |
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• | The offshore energy business, formerly included in the “Marine and Energy” businesses of the Insurance Companies and Lloyd’s Operations, is now included in the Insurance Companies’ and Lloyd’s Operations’ “Property Casualty” businesses. |
• | The marine lines within both the Insurance Companies and Lloyd’s Operations are now presented as “Marine” instead of “Marine and Energy”, since the offshore energy business has now been reclassified to “Property Casualty”. |
• | Engineering and construction, European Property and other run-off business, formerly included in the “Other” category of business within the Insurance Companies and Lloyd’s Operations, are now included under “Property Casualty”. |
• | The “Middle Markets” business, formerly broken out separately in the Insurance Companies, is now included in the Insurance Companies’ “Property Casualty” business. |
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• | Our construction liability lines decreased 39% due to both a decline in demand resulting from current economic conditions as well as increased competition due to new entrants into the market. |
• | A 24% decline in our offshore energy lines primarily resulting from a planned reduction in our Gulf of Mexico exposure as market pricing and terms did not meet our underwriting standards. |
• | A 39% increase in our D&O insurance lines due to continued expansion of this business. |
• | Improved pricing conditions across the majority of our lines of business, resulting in an overall 4% increase in average renewal rates. Pricing conditions have stabilized after experiencing declines across all of our lines in 2008 and were driven by a flight to quality after the market turmoil at the end of 2008. |
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Decrease | Increase | |||||||
Insurance Companies: | ||||||||
Marine | 5 | % | 6 | % | ||||
Property Casualty | 7 | % | 14 | % | ||||
Professional Liability | 13 | % | 16 | % | ||||
Lloyd’s Operations | 7 | % | 12 | % |
Decrease | Increase | |||||||
Insurance Companies: | ||||||||
Marine | 9 | % | 12 | % | ||||
Property Casualty | 14 | % | 16 | % | ||||
Professional Liability | 27 | % | 30 | % | ||||
Lloyd’s Operations | 14 | % | 15 | % |
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Total | Reasonably Likely Range of Deviation | |||||||||||||||||||
Net Loss | Redundancy | Deficiency | ||||||||||||||||||
Reserve | Amount | % | Amount | % | ||||||||||||||||
($ in thousands) | ||||||||||||||||||||
Insurance Companies | ||||||||||||||||||||
Marine | $ | 213,646 | $ | 8,546 | 4 | % | $ | 12,819 | 6 | % | ||||||||||
Property Casualty | 486,412 | 34,049 | 7 | % | 38,913 | 8 | % | |||||||||||||
Professional Liability | 107,217 | 13,938 | 13 | % | 15,010 | 14 | % | |||||||||||||
Total Insurance Companies | 807,275 | 56,533 | 7 | % | 66,742 | 8 | % | |||||||||||||
Total Lloyd’s Operations | 305,659 | 21,396 | 7 | % | 21,396 | 7 | % | |||||||||||||
Total Company | $ | 1,112,934 | $ | 77,929 | 7 | % | $ | 88,138 | 8 | % | ||||||||||
Increase (decrease) to net income | ||||||||||||||||||||
Amount | $ | 50,654 | $ | (57,290 | ) | |||||||||||||||
Per Share(1) | $ | 2.92 | $ | (3.31 | ) |
(1) | Used 17.3 million average diluted shares outstanding for the year ended December 31, 2009. |
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Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||
2009 | 2008 | 2007 | ||||||||||||||||||||||||||||||||||||||||||||||
Gross | Net | Net | Gross | Net | Net | Gross | Net | Net | ||||||||||||||||||||||||||||||||||||||||
Written | Written | Earned | Written | Written | Earned | Written | Written | Earned | ||||||||||||||||||||||||||||||||||||||||
Premiums | % | Premiums | Premiums | Premiums | % | Premiums | Premiums | Premiums | % | Premiums | Premiums | |||||||||||||||||||||||||||||||||||||
($ in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||
Insurance Companies: | ||||||||||||||||||||||||||||||||||||||||||||||||
Marine | $ | 241,438 | 23.1 | % | $ | 171,289 | $ | 157,534 | $ | 248,080 | 22.9 | % | $ | 147,569 | $ | 132,005 | $ | 227,175 | 21.2 | % | $ | 117,294 | $ | 112,370 | ||||||||||||||||||||||||
�� | ||||||||||||||||||||||||||||||||||||||||||||||||
Property Casualty | 352,285 | 33.7 | % | 227,234 | 246,143 | 405,062 | 37.3 | % | 261,322 | 273,977 | 447,615 | 41.8 | % | 301,607 | 275,937 | |||||||||||||||||||||||||||||||||
Professional Liability | 137,053 | 13.1 | % | 79,150 | 75,444 | 109,048 | 10.1 | % | 63,797 | 57,316 | 99,556 | 9.3 | % | 59,117 | 55,149 | |||||||||||||||||||||||||||||||||
Insurance Cos. Total | 730,776 | 69.9 | % | 477,673 | 479,121 | 762,190 | 70.3 | % | 472,688 | 463,298 | 774,346 | 72.3 | % | 478,018 | 443,456 | |||||||||||||||||||||||||||||||||
Lloyd’s Operations: | ||||||||||||||||||||||||||||||||||||||||||||||||
Marine | 191,959 | 18.4 | % | 156,153 | 142,958 | 192,568 | 17.7 | % | 132,788 | 126,126 | 175,567 | 16.4 | % | 110,577 | 111,380 | |||||||||||||||||||||||||||||||||
Property Casualty | 78,151 | 7.5 | % | 45,097 | 39,330 | 91,292 | 8.4 | % | 32,735 | 32,644 | 86,513 | 8.1 | % | 33,852 | 29,482 | |||||||||||||||||||||||||||||||||
Professional Liability | 44,032 | 4.2 | % | 22,332 | 21,954 | 38,872 | 3.6 | % | 23,404 | 21,908 | 34,281 | 3.2 | % | 23,349 | 17,659 | |||||||||||||||||||||||||||||||||
Lloyd’s Ops. Total | 314,142 | 30.1 | % | 223,582 | 204,242 | 322,732 | 29.7 | % | 188,927 | 180,678 | 296,361 | 27.7 | % | 167,778 | 158,521 | |||||||||||||||||||||||||||||||||
Total | $ | 1,044,918 | 100.0 | % | $ | 701,255 | $ | 683,363 | $ | 1,084,922 | 100.0 | % | $ | 661,615 | $ | 643,976 | $ | 1,070,707 | 100.0 | % | $ | 645,795 | $ | 601,977 | ||||||||||||||||||||||||
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2009 | 2008 | 2007 | ||||||||||||||||||||||
Marine liability | $ | 83,915 | 34 | % | $ | 82,991 | 32 | % | $ | 84,270 | 37 | % | ||||||||||||
Inland marine | 28,573 | 12 | % | 23,914 | 10 | % | 12,154 | 5 | % | |||||||||||||||
Cargo | 26,636 | 11 | % | 34,202 | 14 | % | 30,282 | 13 | % | |||||||||||||||
P&I | 25,361 | 11 | % | 28,935 | 12 | % | 26,312 | 12 | % | |||||||||||||||
Transport | 21,527 | 9 | % | 23,013 | 9 | % | 19,587 | 9 | % | |||||||||||||||
Bluewater hull | 19,691 | 8 | % | 17,234 | 7 | % | 23,508 | 10 | % | |||||||||||||||
Craft/Fishing vessel | 19,758 | 8 | % | 16,545 | 7 | % | 15,986 | 7 | % | |||||||||||||||
Other | 15,977 | 7 | % | 21,246 | 9 | % | 15,076 | 7 | % | |||||||||||||||
Total | $ | 241,438 | 100 | % | $ | 248,080 | 100 | % | $ | 227,175 | 100 | % | ||||||||||||
2009 | 2008 | 2007 | ||||||||||||||||||||||
Construction liability | $ | 90,627 | 26 | % | $ | 147,880 | 36 | % | $ | 179,633 | 40 | % | ||||||||||||
Commercial umbrella | 72,509 | 21 | % | 63,977 | 16 | % | 57,371 | 13 | % | |||||||||||||||
Offshore energy | 47,368 | 13 | % | 56,989 | 14 | % | 51,627 | 12 | % | |||||||||||||||
Primary E&S | 23,783 | 7 | % | 35,744 | 9 | % | 50,185 | 11 | % | |||||||||||||||
Other | 117,998 | 33 | % | 100,472 | 25 | % | 108,799 | 24 | % | |||||||||||||||
Total | $ | 352,285 | 100 | % | $ | 405,062 | 100 | % | $ | 447,615 | 100 | % | ||||||||||||
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2009 | 2008 | 2007 | ||||||||||||||||||||||
D&O (public and private) | $ | 99,601 | 73 | % | $ | 75,010 | 69 | % | $ | 67,973 | 68 | % | ||||||||||||
Errors and omissions | 32,129 | 23 | % | 28,097 | 26 | % | 24,515 | 25 | % | |||||||||||||||
Architects and engineers | 5,323 | 4 | % | 5,941 | 5 | % | 7,068 | 7 | % | |||||||||||||||
Total | $ | 137,053 | 100 | % | $ | 109,048 | 100 | % | $ | 99,556 | 100 | % | ||||||||||||
2009 | 2008 | 2007 | ||||||||||||||||||||||
Cargo and specie | $ | 92,139 | 48 | % | $ | 92,789 | 47 | % | $ | 87,412 | 50 | % | ||||||||||||
Marine liability | 51,204 | 27 | % | 58,886 | 31 | % | 48,172 | 27 | % | |||||||||||||||
Assumed reinsurance | 19,756 | 10 | % | 17,078 | 9 | % | 24,280 | 14 | % | |||||||||||||||
Hull | 18,697 | 10 | % | 16,416 | 9 | % | 13,218 | 8 | % | |||||||||||||||
War | 10,163 | 5 | % | 7,399 | 4 | % | 2,485 | 1 | % | |||||||||||||||
Total | $ | 191,959 | 100 | % | $ | 192,568 | 100 | % | $ | 175,567 | 100 | % | ||||||||||||
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2009 | 2008 | 2007 | ||||||||||||||||||||||
Offshore energy | $ | 34,469 | 43 | % | $ | 51,073 | 56 | % | $ | 49,649 | 57 | % | ||||||||||||
Onshore energy | 14,055 | 18 | % | 12,726 | 14 | % | 9,151 | 11 | % | |||||||||||||||
Engineering & construction | 18,383 | 24 | % | 21,036 | 23 | % | 18,551 | 21 | % | |||||||||||||||
Bloodstock | 7,726 | 10 | % | — | 0 | % | — | 0 | % | |||||||||||||||
Property | (76 | ) | 0 | % | 5,631 | 6 | % | 9,162 | 11 | % | ||||||||||||||
US Casualty | 3,594 | 5 | % | 826 | 1 | % | — | 0 | % | |||||||||||||||
Total | $ | 78,151 | 100 | % | $ | 91,292 | 100 | % | $ | 86,513 | 100 | % | ||||||||||||
2009 | 2008 | 2007 | ||||||||||||||||||||||
D&O (public and private) | $ | 26,776 | 61 | % | $ | 15,845 | 41 | % | $ | 16,511 | 48 | % | ||||||||||||
E&O | 17,256 | 39 | % | 23,027 | 59 | % | 17,770 | 52 | % | |||||||||||||||
Total | $ | 44,032 | 100 | % | $ | 38,872 | 100 | % | $ | 34,281 | 100 | % | ||||||||||||
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2009 | 2008 | 2007 | ||||||||||||||||||||||
% of | % of | % of | ||||||||||||||||||||||
Ceded | Gross | Ceded | Gross | Ceded | Gross | |||||||||||||||||||
Written | Written | Written | Written | Written | Written | |||||||||||||||||||
Premiums | Premiums | Premiums | Premiums | Premiums | Premiums | |||||||||||||||||||
($ in thousands) | ||||||||||||||||||||||||
Insurance Companies | ||||||||||||||||||||||||
Marine | $ | 70,149 | 29.1 | % | $ | 100,511 | 40.5 | % | $ | 109,881 | 48.4 | % | ||||||||||||
Property Casualty | 125,051 | 35.5 | % | 143,740 | 35.5 | % | 146,008 | 32.6 | % | |||||||||||||||
Professional Liability | 57,903 | 42.2 | % | 45,251 | 41.5 | % | 40,439 | 40.6 | % | |||||||||||||||
Subtotal | 253,103 | 34.6 | % | 289,502 | 38.0 | % | 296,328 | 38.3 | % | |||||||||||||||
Lloyd’s Operations | ||||||||||||||||||||||||
Marine | 35,806 | 18.7 | % | 59,780 | 31.0 | % | 64,990 | 37.0 | % | |||||||||||||||
Property Casualty | 33,054 | 42.3 | % | 58,557 | 64.1 | % | 52,661 | 60.9 | % | |||||||||||||||
Professional Liability | 21,700 | 49.3 | % | 15,468 | 39.8 | % | 10,932 | 31.9 | % | |||||||||||||||
Subtotal | 90,560 | 28.8 | % | 133,805 | 41.5 | % | 128,583 | 43.4 | % | |||||||||||||||
Total | $ | 343,663 | 32.9 | % | $ | 423,307 | 39.0 | % | $ | 424,911 | 39.7 | % | ||||||||||||
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Year ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
($ in thousands) | ||||||||||||
Fixed maturities | $ | (3,101 | ) | $ | (8,604 | ) | $ | — | ||||
Equity securities | (8,776 | ) | (28,441 | ) | (655 | ) | ||||||
Net other-than-temporary impairment losses recognized in earnings | $ | (11,877 | ) | $ | (37,045 | ) | $ | (655 | ) | |||
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Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
($ in thousands) | ||||||||||||
Fixed maturities: | ||||||||||||
Gains | $ | 18,312 | $ | 3,650 | $ | 1,320 | ||||||
(Losses) | (9,676 | ) | (1,670 | ) | (1,749 | ) | ||||||
8,636 | 1,980 | (429 | ) | |||||||||
Equity securities: | ||||||||||||
Gains | 2,110 | 720 | 3,626 | |||||||||
(Losses) | (1,529 | ) | (3,954 | ) | (536 | ) | ||||||
581 | (3,234 | ) | 3,090 | |||||||||
Net realized gains (losses) | $ | 9,217 | $ | (1,254 | ) | $ | 2,661 | |||||
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Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
($ in thousands) | ||||||||||||
Insurance Companies | ||||||||||||
Marine | $ | 11,893 | $ | (5,298 | ) | $ | (11,595 | ) | ||||
Property Casualty | (35,658 | ) | (33,065 | ) | (11,836 | ) | ||||||
Professional Liability | 20,686 | (3,559 | ) | (10,365 | ) | |||||||
Insurance Companies | $ | (3,079 | ) | $ | (41,922 | ) | $ | (33,796 | ) | |||
Lloyd’s Operations | (5,862 | ) | (8,824 | ) | (13,213 | ) | ||||||
Total | $ | (8,941 | ) | $ | (50,746 | ) | $ | (47,009 | ) | |||
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• | $36.5 million for contractors’ liability due to an actuarial review conducted in 2009 which indicated that loss development on the 2006 and prior underwriting years has been more favorable than our prior expectations for those underwriting years |
• | $9.3 million from our primary E&S lines and $6.2 million in excess casualty business due to favorable loss trends in underwriting years 2007 and prior, and |
• | $8.0 million of favorable development on our offshore energy (NavTech) book due to favorable claims trends across a number of prior underwriting years. |
• | $12.0 million in our Nav Pac business due to reported loss activity in excess of our prior expectations from most underwriting years resulting from reviews of open claims in the auto and liability lines of business |
• | $6.4 million from our liquor business, which is now in run-off, and |
• | $5.9 million in our personal umbrella books of business across most underwriting years where large loss activity has exceeded our expectations. |
• | The directors and officers’ liability book of business had $12.4 million of adverse development, which was primarily attributable to the unexpected development of previously reported claims in the 2006 and prior underwriting years. This loss activity was inconsistent with the loss emergence trends that we observed in calendar years 2007 and 2008 and it caused us to increase our ultimate loss projections in the 2006 and prior underwriting years, as well as those in the more current underwriting years. |
• | The lawyers’ liability book of business had adverse development of $8.3 million due to reported loss activity in underwriting years 2005 to 2008 in excess of our prior expectations. |
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Year Ended December 31, | ||||||||
2009 | 2008 | |||||||
($ in thousands) | ||||||||
Gross of Reinsurance | ||||||||
Beginning gross reserves | $ | 107,399 | $ | — | ||||
Incurred loss & LAE | 1,039 | 114,000 | ||||||
Calendar year payments | 48,929 | 6,601 | ||||||
Ending gross reserves | $ | 59,509 | $ | 107,399 | ||||
Gross case loss reserves | $ | 34,015 | $ | 70,299 | ||||
Gross IBNR loss reserves | 25,494 | 37,100 | ||||||
Ending gross reserves | $ | 59,509 | $ | 107,399 | ||||
Net of Reinsurance | ||||||||
Beginning net reserves | $ | 12,923 | $ | — | ||||
Incurred loss & LAE | 978 | 17,169 | ||||||
Calendar year payments | 11,218 | 4,246 | ||||||
Ending net reserves | $ | 2,683 | $ | 12,923 | ||||
Net case loss reserves | $ | 1,793 | $ | 11,696 | ||||
Net IBNR loss reserves | 890 | 1,227 | ||||||
Ending net reserves | $ | 2,683 | $ | 12,923 | ||||
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Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
($ in thousands) | ||||||||||||
Gross of Reinsurance | ||||||||||||
Beginning gross reserves | $ | 97,732 | $ | 141,831 | $ | 319,230 | ||||||
Incurred loss & LAE | 671 | (12,250 | ) | (29,349 | ) | |||||||
Calendar year payments | 31,365 | 31,849 | 148,050 | |||||||||
Ending gross reserves | $ | 67,038 | $ | 97,732 | $ | 141,831 | ||||||
Gross case loss reserves | $ | 49,291 | $ | 62,732 | $ | 94,959 | ||||||
Gross IBNR loss reserves | 17,747 | 35,000 | 46,872 | |||||||||
Ending gross reserves | $ | 67,038 | $ | 97,732 | $ | 141,831 | ||||||
Net of Reinsurance | ||||||||||||
Beginning net reserves | $ | 3,667 | $ | 4,519 | $ | 10,003 | ||||||
Incurred loss & LAE | 114 | (990 | ) | (1,909 | ) | |||||||
Calendar year payments | 245 | (138 | ) | 3,575 | ||||||||
Ending net reserves | $ | 3,536 | $ | 3,667 | $ | 4,519 | ||||||
Net case loss reserves | $ | 183 | $ | 279 | $ | 646 | ||||||
Net IBNR loss reserves | 3,353 | 3,388 | 3,873 | |||||||||
Ending net reserves | $ | 3,536 | $ | 3,667 | $ | 4,519 | ||||||
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Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
($ in thousands) | ||||||||||||
Gross of Reinsurance | ||||||||||||
Beginning gross reserves | $ | 21,774 | $ | 23,194 | $ | 37,171 | ||||||
Incurred loss & LAE | 928 | 796 | (780 | ) | ||||||||
Calendar year payments | 555 | 2,216 | 13,197 | |||||||||
Ending gross reserves | $ | 22,147 | $ | 21,774 | $ | 23,194 | ||||||
Gross case loss reserves | $ | 14,291 | $ | 13,918 | $ | 16,014 | ||||||
Gross IBNR loss reserves | 7,856 | 7,856 | 7,180 | |||||||||
Ending gross reserves | $ | 22,147 | $ | 21,774 | $ | 23,194 | ||||||
Net of Reinsurance | ||||||||||||
Beginning net reserves | $ | 16,683 | $ | 16,717 | $ | 21,381 | ||||||
Incurred loss & LAE | (25 | ) | 263 | 1,779 | ||||||||
Calendar year payments | (105 | ) | 297 | 6,443 | ||||||||
Ending net reserves | $ | 16,763 | $ | 16,683 | $ | 16,717 | ||||||
Net case loss reserves | $ | 9,112 | $ | 9,032 | $ | 9,715 | ||||||
Net IBNR loss reserves | 7,651 | 7,651 | 7,002 | |||||||||
Ending net reserves | $ | 16,763 | $ | 16,683 | $ | 16,717 | ||||||
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December 31, | December 31, | |||||||||||
2009 | 2008 | Change | ||||||||||
($ in thousands) | ||||||||||||
Reinsurance recoverables: | ||||||||||||
Paid losses | $ | 76,505 | $ | 67,227 | $ | 9,278 | ||||||
Unpaid losses and LAE reserves | 807,352 | 853,793 | (46,441 | ) | ||||||||
Total | $ | 883,857 | $ | 921,020 | $ | (37,163 | ) | |||||
December 31, | December 31, | |||||||||||
2009 | 2008 | Change | ||||||||||
($ in thousands) | ||||||||||||
Gross reserves for losses and LAE | $ | 1,920,286 | $ | 1,853,664 | $ | 66,622 | ||||||
Less: Reinsurance recoverable on unpaid losses and LAE reserves | 807,352 | 853,793 | (46,441 | ) | ||||||||
Net loss and LAE reserves | $ | 1,112,934 | $ | 999,871 | $ | 113,063 | ||||||
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December 31, 2009 | ||||||||||||||||
Net | Net | Total | % of IBNR | |||||||||||||
Reported | IBNR | Net Loss | to Total Net | |||||||||||||
Reserves | Reserves | Reserves | Loss Reserves | |||||||||||||
($ in thousands) | ||||||||||||||||
Insurance Companies: | ||||||||||||||||
Marine | $ | 113,604 | $ | 100,042 | $ | 213,646 | 46.8 | % | ||||||||
Property Casualty | 134,427 | 351,985 | 486,412 | 72.4 | % | |||||||||||
Professional liability | 38,410 | 68,807 | 107,217 | 64.2 | % | |||||||||||
Total Insurance Companies | 286,441 | 520,834 | 807,275 | 64.5 | % | |||||||||||
Lloyd’s Operations: | ||||||||||||||||
Marine | 107,800 | 101,851 | 209,651 | 48.6 | % | |||||||||||
Property Casualty | 27,148 | 25,175 | 52,323 | 48.1 | % | |||||||||||
Professional liability | 7,442 | 36,243 | 43,685 | 83.0 | % | |||||||||||
Total Lloyd’s Operations | 142,390 | 163,269 | 305,659 | 53.4 | % | |||||||||||
Total | $ | 428,831 | $ | 684,103 | $ | 1,112,934 | 61.5 | % | ||||||||
December 31, 2008 | ||||||||||||||||
Net | Net | Total | % of IBNR | |||||||||||||
Reported | IBNR | Net Loss | to Total Net | |||||||||||||
Reserves | Reserves | Reserves | Loss Reserves | |||||||||||||
($ in thousands) | ||||||||||||||||
Insurance Companies: | ||||||||||||||||
Marine | $ | 96,244 | $ | 96,995 | $ | 193,239 | 50.2 | % | ||||||||
Property Casualty | 115,810 | 358,305 | 474,115 | 75.6 | % | |||||||||||
Professional liability | 22,913 | 58,793 | 81,706 | 72.0 | % | |||||||||||
Total Insurance Companies | 234,967 | 514,093 | 749,060 | 68.6 | % | |||||||||||
Lloyd’s Operations: | ||||||||||||||||
Marine | 99,233 | 78,293 | 177,526 | 44.1 | % | |||||||||||
Property Casualty | 26,218 | 16,386 | 42,604 | 38.5 | % | |||||||||||
Professional liability | 5,822 | 24,859 | 30,681 | 81.0 | % | |||||||||||
Total Lloyd’s Operations | 131,273 | 119,538 | 250,811 | 47.7 | % | |||||||||||
Total | $ | 366,240 | $ | 633,631 | $ | 999,871 | 63.4 | % | ||||||||
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Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
($ in thousands) | ||||||||||||
Gross written premiums | $ | 730,776 | $ | 762,190 | $ | 774,346 | ||||||
Net written premiums | 477,673 | 472,688 | 478,018 | |||||||||
Net earned premiums | 479,121 | 463,298 | 443,456 | |||||||||
Net losses and loss adjustment expenses | (304,672 | ) | (275,767 | ) | (256,652 | ) | ||||||
Commission expenses | (61,949 | ) | (55,752 | ) | (52,490 | ) | ||||||
Other operating expenses | (104,801 | ) | (92,297 | ) | (81,053 | ) | ||||||
Commission income and other income (expense) | 3,498 | 2,145 | 1,510 | |||||||||
Underwriting profit | 11,197 | 41,627 | 54,771 | |||||||||
Net investment income | 65,717 | 63,544 | 58,261 | |||||||||
Net realized gains (losses) | 533 | (37,822 | ) | 1,973 | ||||||||
Income before income tax expense | 77,447 | 67,349 | 115,005 | |||||||||
Income tax expense | 19,819 | 16,401 | 35,061 | |||||||||
Net income | $ | 57,628 | $ | 50,948 | $ | 79,944 | ||||||
Identifiable assets | $ | 2,554,037 | $ | 2,477,139 | $ | 2,322,647 | ||||||
Loss and loss expenses ratio | 63.6 | % | 59.5 | % | 57.9 | % | ||||||
Commission expense ratio | 12.9 | % | 12.0 | % | 11.8 | % | ||||||
Other operating expenses ratio(1) | 21.1 | % | 19.5 | % | 17.9 | % | ||||||
Combined ratio | 97.6 | % | 91.0 | % | 87.6 | % | ||||||
(1) | IncludesOther operating expensesandCommission income and Other income (expense). |
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Year Ended December 31, 2009 | ||||||||||||||||||||||||||||
($ in thousands) | ||||||||||||||||||||||||||||
Net | Losses | |||||||||||||||||||||||||||
Earned | and LAE | Underwriting | Underwriting | Loss | Expense | Combined | ||||||||||||||||||||||
Premiums | Incurred | Expenses | Profit (Loss) | Ratio | Ratio | Ratio | ||||||||||||||||||||||
Marine | $ | 157,534 | $ | 109,916 | $ | 50,451 | $ | (2,833 | ) | 69.8 | % | 32.0 | % | 101.8 | % | |||||||||||||
Property Casualty | 246,143 | 123,775 | 86,116 | 36,252 | 50.3 | % | 35.0 | % | 85.3 | % | ||||||||||||||||||
Professional Liability | 75,444 | 70,981 | 26,685 | (22,222 | ) | 94.1 | % | 35.4 | % | 129.5 | % | |||||||||||||||||
Total | $ | 479,121 | $ | 304,672 | $ | 163,252 | $ | 11,197 | 63.6 | % | 34.0 | % | 97.6 | % | ||||||||||||||
Year Ended December 31, 2008 | ||||||||||||||||||||||||||||
($ in thousands) | ||||||||||||||||||||||||||||
Net | Losses | |||||||||||||||||||||||||||
Earned | and LAE | Underwriting | Underwriting | Loss | Expense | Combined | ||||||||||||||||||||||
Premiums | Incurred | Expenses | Profit (Loss) | Ratio | Ratio | Ratio | ||||||||||||||||||||||
Marine | $ | 132,005 | $ | 84,099 | $ | 38,184 | $ | 9,722 | 63.7 | % | 28.9 | % | 92.6 | % | ||||||||||||||
Property Casualty | 273,977 | 158,457 | 87,310 | 28,210 | 57.8 | % | 31.9 | % | 89.7 | % | ||||||||||||||||||
Professional Liability | 57,316 | 33,211 | 20,410 | 3,695 | 57.9 | % | 35.6 | % | 93.5 | % | ||||||||||||||||||
Total | $ | 463,298 | $ | 275,767 | $ | 145,904 | $ | 41,627 | 59.5 | % | 31.5 | % | 91.0 | % | ||||||||||||||
Year Ended December 31, 2007 | ||||||||||||||||||||||||||||
($ in thousands) | ||||||||||||||||||||||||||||
Net | Losses | |||||||||||||||||||||||||||
Earned | and LAE | Underwriting | Underwriting | Loss | Expense | Combined | ||||||||||||||||||||||
Premiums | Incurred | Expenses | Profit (Loss) | Ratio | Ratio | Ratio | ||||||||||||||||||||||
Marine | $ | 112,370 | $ | 64,802 | $ | 31,878 | $ | 15,690 | 57.7 | % | 28.4 | % | 86.1 | % | ||||||||||||||
Property Casualty | 275,937 | 159,248 | 80,509 | 36,180 | 57.7 | % | 29.2 | % | 86.9 | % | ||||||||||||||||||
Professional Liability | 55,149 | 32,602 | 19,646 | 2,901 | 59.1 | % | 35.6 | % | 94.7 | % | ||||||||||||||||||
Total | $ | 443,456 | $ | 256,652 | $ | 132,033 | $ | 54,771 | 57.9 | % | 29.7 | % | 87.6 | % | ||||||||||||||
�� |
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Hurricane | Hurricane | |||||||||||
Gustav | Ike | Total | ||||||||||
($ in thousands) | ||||||||||||
Reduction in net earned premiums for reinstatement costs | $ | (871 | ) | $ | (6,343 | ) | $ | (7,214 | ) | |||
Gross losses incurred | 7,200 | 53,800 | 61,000 | |||||||||
Reinsurance recoverable | 4,377 | 47,546 | 51,923 | |||||||||
Net losses incurred | 2,823 | 6,254 | 9,077 | |||||||||
Underwriting loss | $ | (3,694 | ) | $ | (12,597 | ) | $ | (16,291 | ) | |||
After-tax net loss | $ | (2,401 | ) | $ | (8,188 | ) | $ | (10,589 | ) | |||
Reduction in earnings per share | $ | (0.14 | ) | $ | (0.48 | ) | $ | (0.62 | ) | |||
Effect on combined ratio: | ||||||||||||
Loss and LAE ratio | 0.7 | % | 2.1 | % | 2.8 | % | ||||||
Expense ratio | 0.1 | % | 0.4 | % | 0.5 | % | ||||||
Combined ratio | 0.8 | % | 2.5 | % | 3.3 | % | ||||||
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Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
($ in thousands) | ||||||||||||
Gross written premiums | $ | 314,142 | $ | 322,732 | $ | 296,361 | ||||||
Net written premiums | 223,582 | 188,927 | 167,778 | |||||||||
Net earned premiums | 204,242 | 180,678 | 158,521 | |||||||||
Net losses and loss adjustment expenses | (131,326 | ) | (117,364 | ) | (83,940 | ) | ||||||
Commission expenses | (37,727 | ) | (34,033 | ) | (25,123 | ) | ||||||
Other operating expenses | (27,896 | ) | (30,961 | ) | (29,356 | ) | ||||||
Commission income and other income (expense) | 961 | (600 | ) | 504 | ||||||||
Underwriting profit (loss) | 8,254 | (2,280 | ) | 20,606 | ||||||||
Net investment income | 9,229 | 11,655 | 10,524 | |||||||||
Net realized gains (losses) | (3,193 | ) | (477 | ) | 33 | |||||||
Income before income tax expense | 14,290 | 8,898 | 31,163 | |||||||||
Income tax expense | 5,582 | 3,269 | 10,946 | |||||||||
Net income | $ | 8,708 | $ | 5,629 | $ | 20,217 | ||||||
Identifiable assets | $ | 799,577 | $ | 779,800 | $ | 744,002 | ||||||
Loss and loss expenses ratio | 64.3 | % | 65.0 | % | 53.0 | % | ||||||
Commission expense ratio | 18.5 | % | 18.8 | % | 15.8 | % | ||||||
Other operating expenses ratio(1) | 13.2 | % | 17.5 | % | 18.2 | % | ||||||
Combined ratio | 96.0 | % | 101.3 | % | 87.0 | % | ||||||
(1) | IncludesOther operating expensesandCommission income and Other income (expense). |
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Hurricane | Hurricane | |||||||||||
Gustav | Ike | Total | ||||||||||
($ in thousands) | ||||||||||||
Reduction in net earned premiums for reinstatement costs | $ | (672 | ) | $ | (4,292 | ) | $ | (4,964 | ) | |||
Gross losses incurred | 6,800 | 46,200 | 53,000 | |||||||||
Reinsurance recoverable | 4,623 | 40,285 | 44,908 | |||||||||
Net losses incurred | 2,177 | 5,915 | 8,092 | |||||||||
Underwriting loss | $ | (2,849 | ) | $ | (10,207 | ) | $ | (13,056 | ) | |||
After-tax net loss | $ | (1,852 | ) | $ | (6,635 | ) | $ | (8,487 | ) | |||
Reduction in earnings per share | $ | (0.11 | ) | $ | (0.39 | ) | $ | (0.50 | ) | |||
Effect on combined ratio: | ||||||||||||
Loss and LAE ratio | 1.4 | % | 4.7 | % | 6.1 | % | ||||||
Expense ratio | 0.2 | % | 0.8 | % | 1.0 | % | ||||||
Combined ratio | 1.6 | % | 5.5 | % | 7.1 | % | ||||||
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Payments Due by Period | ||||||||||||||||||||
Less than | More than | |||||||||||||||||||
Contractual Obligations | Total | 1 Year | 1-3 Years | 3-5 Years | 5 Years | |||||||||||||||
($ in thousands) | ||||||||||||||||||||
Reserves for losses and LAE(1) | $ | 1,920,286 | $ | 731,746 | $ | 668,866 | $ | 267,634 | $ | 252,040 | ||||||||||
7% Senior Notes(2) | 167,325 | 8,050 | 16,100 | 16,100 | 127,075 | |||||||||||||||
Operating Leases | 54,757 | 7,379 | 15,403 | 13,549 | 18,426 | |||||||||||||||
Total | $ | 2,142,368 | $ | 747,175 | $ | 700,369 | $ | 297,283 | $ | 397,541 | ||||||||||
(1) | The amounts determined are estimates which are subject to a high degree of variation and uncertainty, and are not subject to any specific payment schedule since the timing of these obligations are not set contractually. The amounts in the above table exclude reinsurance recoveries of $807 million. See “Business — Loss Reserves” included herein. | |
(2) | Includes interest payments. |
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Gross | Gross | OTTI | ||||||||||||||||||
Unrealized | Unrealized | Cost or | Recognized | |||||||||||||||||
December 31, 2009 | Fair Value | Gains | (Losses) | Amortized Cost | in OCI | |||||||||||||||
($ in thousands) | ||||||||||||||||||||
U.S. Government Treasury bonds, agency bonds and foreign government bonds | $ | 471,598 | $ | 7,397 | $ | (597 | ) | $ | 464,798 | $ | — | |||||||||
States, municipalities and political subdivisions | 676,699 | 25,044 | (2,917 | ) | 654,572 | — | ||||||||||||||
Mortgage- and asset-backed securities: | ||||||||||||||||||||
Agency mortgage-backed securities | 283,578 | 12,607 | (98 | ) | 271,069 | — | ||||||||||||||
Residential mortgage obligations | 31,071 | — | (7,246 | ) | 38,317 | (5,723 | ) | |||||||||||||
Asset-backed securities | 16,469 | 612 | (34 | ) | 15,891 | (23 | ) | |||||||||||||
Commercial mortgage-backed securities | 100,393 | 594 | (5,028 | ) | 104,827 | — | ||||||||||||||
Subtotal | 431,511 | 13,813 | (12,406 | ) | 430,104 | (5,746 | ) | |||||||||||||
Corporate bonds | 236,861 | 9,111 | (759 | ) | 228,509 | — | ||||||||||||||
Total fixed maturities | 1,816,669 | 55,365 | (16,679 | ) | 1,777,983 | (5,746 | ) | |||||||||||||
Equity securities — common stocks | 62,610 | 15,244 | (10 | ) | 47,376 | — | ||||||||||||||
Cash | 509 | — | — | 509 | — | |||||||||||||||
Short-term investments | 176,799 | — | — | 176,799 | — | |||||||||||||||
Total | $ | 2,056,587 | $ | 70,609 | $ | (16,689 | ) | $ | 2,002,667 | $ | (5,746 | ) | ||||||||
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Gross | Gross | |||||||||||||||
Unrealized | Unrealized | Cost or | ||||||||||||||
December 31, 2008 | Fair Value | Gains | (Losses) | Amortized Cost | ||||||||||||
($ in thousands) | ||||||||||||||||
U.S. Government Treasury bonds, agency bonds and foreign government bonds | $ | 361,656 | $ | 25,741 | $ | (145 | ) | $ | 336,060 | |||||||
States, municipalities and political subdivisions | 614,609 | 12,568 | (8,036 | ) | 610,077 | |||||||||||
Mortgage- and asset-backed securities: | ||||||||||||||||
Agency mortgage-backed securities | 299,775 | 10,930 | (26 | ) | 288,871 | |||||||||||
Residential mortgage obligations | 56,743 | — | (27,119 | ) | 83,862 | |||||||||||
Asset-backed securities | 29,436 | 5 | (1,289 | ) | 30,720 | |||||||||||
Commercial mortgage-backed securities | 92,684 | — | (20,350 | ) | 113,034 | |||||||||||
Subtotal | 478,638 | 10,935 | (48,784 | ) | 516,487 | |||||||||||
Corporate bonds | 188,869 | 1,398 | (14,660 | ) | 202,131 | |||||||||||
Total fixed maturities | 1,643,772 | 50,642 | (71,625 | ) | 1,664,755 | |||||||||||
Equity securities — common stocks | 51,802 | 1,266 | (1,987 | ) | 52,523 | |||||||||||
Cash | 1,457 | — | — | 1,457 | ||||||||||||
Short-term investments | 220,684 | — | — | 220,684 | ||||||||||||
Total | $ | 1,917,715 | $ | 51,908 | $ | (73,612 | ) | $ | 1,939,419 | |||||||
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Quoted Prices | Significant | |||||||||||||||
In Active | Other | Significant | ||||||||||||||
Markets for | Observable | Unobservable | ||||||||||||||
Identical Assets | Inputs | Inputs | ||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
($ in thousands) | ||||||||||||||||
Fixed maturities | $ | 331,925 | $ | 1,484,744 | $ | — | $ | 1,816,669 | ||||||||
Equity securities | 62,610 | — | — | 62,610 | ||||||||||||
Short-term investments | 9,992 | 166,807 | — | 176,799 | ||||||||||||
Total | $ | 404,527 | $ | 1,651,551 | $ | — | $ | 2,056,078 | ||||||||
Twelve Months Ended | ||||
($ in thousands) | December 31, 2009 | |||
Level 3 investments as of January 1 | $ | 156 | ||
Unrealized net gains included in other comprehensive income (loss) | 23 | |||
Purchases, sales, paydowns and amortization | (23 | ) | ||
Transfer from Level 3 | (156 | ) | ||
Transfer to Level 3 | — | |||
Level 3 investments as of December 31 | $ | — | ||
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Gross | Gross | Cost or | ||||||||||||||
Fair | Unrealized | Unrealized | Amortized | |||||||||||||
December 31, 2009 | Value | Gains | (Losses) | Cost | ||||||||||||
($ in thousands) | ||||||||||||||||
U.S. Treasury bonds | $ | 362,614 | $ | 5,549 | $ | (560 | ) | $ | 357,625 | |||||||
Agency bonds | 82,739 | 1,489 | — | 81,250 | ||||||||||||
Foreign government bonds | 26,245 | 359 | (37 | ) | 25,923 | |||||||||||
Total | $ | 471,598 | $ | 7,397 | $ | (597 | ) | $ | 464,798 | |||||||
Gross | Gross | Cost or | ||||||||||||||
Fair | Unrealized | Unrealized | Amortized | |||||||||||||
December 31, 2008 | Value | Gains | (Losses) | Cost | ||||||||||||
($ in thousands) | ||||||||||||||||
U.S. Treasury bonds | $ | 290,059 | $ | 23,243 | $ | (143 | ) | $ | 266,959 | |||||||
Agency bonds | 58,401 | 2,008 | (2 | ) | 56,395 | |||||||||||
Foreign government bonds | 13,196 | 490 | — | 12,706 | ||||||||||||
Total | $ | 361,656 | $ | 25,741 | $ | (145 | ) | $ | 336,060 | |||||||
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Gross | Gross | Cost or | ||||||||||||||||||
Fair | Unrealized | Unrealized | Amortized | S&P | ||||||||||||||||
Value | Gains | (Losses) | Cost | Rating | ||||||||||||||||
($ in thousands) | ||||||||||||||||||||
Issuers: | ||||||||||||||||||||
State of Washington | $ | 17,428 | $ | 799 | $ | (25 | ) | $ | 16,654 | AA | ||||||||||
Texas State Transportation Commission | 15,542 | — | (163 | ) | 15,705 | AA+ | ||||||||||||||
University of Pittsburgh | 14,060 | 574 | — | 13,486 | AA | |||||||||||||||
City of San Antonio | 11,581 | 571 | — | 11,010 | AA | |||||||||||||||
City of Chicago | 11,401 | 377 | (32 | ) | 11,056 | A- | ||||||||||||||
Virginia Resources Authority | 11,389 | 826 | — | 10,563 | AAA | |||||||||||||||
County of Fairfax | 11,027 | — | (70 | ) | 11,097 | AAA | ||||||||||||||
State of Louisiana | 9,992 | 518 | — | 9,474 | A+ | |||||||||||||||
State of Wisconsin | 9,962 | 479 | — | 9,483 | AA- | |||||||||||||||
Salt River Project Agricultural Improvement | 9,931 | 155 | — | 9,776 | AA | |||||||||||||||
Commonwealth of Massachusetts | 9,059 | 581 | (7 | ) | 8,485 | AA | ||||||||||||||
New York City Transitional Finance Authority | 8,107 | — | (343 | ) | 8,450 | AA | ||||||||||||||
City of New York | 8,026 | 288 | (20 | ) | 7,758 | AA- | ||||||||||||||
Illinois Finance Authority | 8,015 | 69 | (222 | ) | 8,168 | BBB+ | ||||||||||||||
Cypress-Fairbanks Independent School Dist | 7,985 | 131 | — | 7,854 | AA- | |||||||||||||||
Subtotal | 163,505 | 5,368 | (882 | ) | 159,019 | |||||||||||||||
All Other | 513,194 | 19,676 | (2,035 | ) | 495,553 | |||||||||||||||
Total | $ | 676,699 | $ | 25,044 | $ | (2,917 | ) | $ | 654,572 | |||||||||||
Equivalent | Equivalent | Net | ||||||||||||
S&P | Moody’s | Unrealized | ||||||||||||
Rating | Rating | Fair Value | Book Value | Gain/(Loss) | ||||||||||
($ in thousands) | ||||||||||||||
AAA/AA/A | Aaa/Aa/A | $ | 639,802 | $ | 617,620 | $ | 22,182 | |||||||
BBB | Baa | 27,668 | 27,641 | 27 | ||||||||||
BB | Ba | 2,000 | 2,014 | (14 | ) | |||||||||
B | B | — | — | — | ||||||||||
CCC or lower | Caa or lower | — | — | — | ||||||||||
N/A | N/A | 7,229 | 7,297 | (68 | ) | |||||||||
Total | $ | 676,699 | $ | 654,572 | $ | 22,127 | ||||||||
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Gross | Gross | Cost or | ||||||||||||||
Fair | Unrealized | Unrealized | Amortized | |||||||||||||
Value | Gains | (Losses) | Cost | |||||||||||||
($ in thousands) | ||||||||||||||||
Agency mortgage-backed securities: | ||||||||||||||||
GNMA | $ | 44,351 | $ | 1,300 | $ | (53 | ) | $ | 43,104 | |||||||
FNMA | 173,786 | 8,716 | (11 | ) | 165,081 | |||||||||||
FHLMC | 65,441 | 2,591 | (34 | ) | 62,884 | |||||||||||
Total | $ | 283,578 | $ | 12,607 | $ | (98 | ) | $ | 271,069 | |||||||
Gross | Gross | Cost or | ||||||||||||||
Fair | Unrealized | Unrealized | Amortized | |||||||||||||
Value | Gains | (Losses) | Cost | |||||||||||||
($ in thousands) | ||||||||||||||||
Residential mortgage obligations: | ||||||||||||||||
Prime | $ | 29,565 | $ | — | $ | (6,836 | ) | $ | 36,401 | |||||||
Alt-A | 1,506 | — | (410 | ) | 1,916 | |||||||||||
Subprime | — | — | — | — | ||||||||||||
Total | $ | 31,071 | $ | — | $ | (7,246 | ) | $ | 38,317 | |||||||
Gross | Gross | Cost or | ||||||||||||||
Fair | Unrealized | Unrealized | Amortized | |||||||||||||
Value | Gains | (Losses) | Cost | |||||||||||||
($ in thousands) | ||||||||||||||||
Asset-backed securities: | ||||||||||||||||
Prime | $ | 16,323 | $ | 612 | $ | (10 | ) | $ | 15,721 | |||||||
Alt-A | — | — | — | — | ||||||||||||
Subprime | 146 | — | (24 | ) | 170 | |||||||||||
Total | $ | 16,469 | $ | 612 | $ | (34 | ) | $ | 15,891 | |||||||
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Issue | Fair | Book | Unrealized | S&P | Moody’s | |||||||||||||||
Security Description | Date | Value | Value | (Loss) | Rating | Rating | ||||||||||||||
($ in thousands) | ||||||||||||||||||||
GMAC Mtg Corp Ln Tr 05 Ar6 2A1 | 2005 | $ | 2,907 | $ | 3,489 | $ | (582 | ) | BB | B3 | ||||||||||
Merrill Lynch Mtg Inv Inc 05 A9 2A1E | 2005 | 2,569 | 3,523 | (954 | ) | B+ | NR | |||||||||||||
Wells Fargo Mtg Bkd Secs Tr 06 Ar5 2A1 | 2006 | 2,469 | 2,725 | (256 | ) | NR | Caa1 | |||||||||||||
Wells Fargo Mtg Bkd Secs Tr 05 Ar4 2A2 | 2005 | 966 | 1,102 | (136 | ) | NR | A2 | |||||||||||||
Merrill Lynch Mtg Inv Inc 05 A9 2A1 | 2005 | 742 | 780 | (38 | ) | BBB | NR | |||||||||||||
Bear Stearns Adjustable Rate 06 1 A1 | 2006 | 712 | 814 | (102 | ) | NR | Baa1 | |||||||||||||
GSR Mortgage Loan Trust 06 Ar1 2A1 | 2006 | 662 | 833 | (171 | ) | BB | NR | |||||||||||||
Wells Fargo Mtg Bkd Secs Tr 06 Ar6 3A | 2006 | 641 | 773 | (132 | ) | NR | B2 | |||||||||||||
JP Morgan Mortgage Trust 06 A4 1A1 | 2006 | 628 | 869 | (241 | ) | NR | B3 | |||||||||||||
Master Adj Rate Mtg Tr 05 6 5A1 | 2005 | 618 | 811 | (193 | ) | B- | Baa2 | |||||||||||||
Bear Stearns Adjustable Rate 05 3 2A1 | 2005 | 610 | 706 | (96 | ) | BB | Ba1 | |||||||||||||
Mortgageit Trust 05 1 2A | 2005 | 605 | 672 | (67 | ) | AAA | Aaa | |||||||||||||
JP Morgan Mortgage Trust 07-A3 1A1 | 2007 | 604 | 890 | (286 | ) | CCC | NR | |||||||||||||
Wells Fargo Mortgage Backed Se 06-Ar14 2 | 2006 | 577 | 722 | (145 | ) | NR | Caa1 | |||||||||||||
JP Morgan Mortgage Trust 05 A4 3A1 | 2005 | 556 | 600 | (44 | ) | AAA | Baa1 | |||||||||||||
Subtotal | 15,866 | 19,309 | (3,443 | ) | ||||||||||||||||
All Other | 15,205 | 19,008 | (3,803 | ) | ||||||||||||||||
Total | $ | 31,071 | $ | 38,317 | $ | (7,246 | ) | |||||||||||||
Total | ||||||||||||||||||||||||||||||||||||
Total | Amortized | Unrealized | ||||||||||||||||||||||||||||||||||
AAA | AA | A | BBB | BB | CC | Fair Value | Cost | Gain/(Loss) | ||||||||||||||||||||||||||||
($ in thousands) | ||||||||||||||||||||||||||||||||||||
Auto Loans | $ | 7,331 | $ | 3,574 | $ | 461 | $ | 1,633 | $ | — | $ | — | $ | 12,999 | $ | 12,556 | $ | 443 | ||||||||||||||||||
Credit Cards | — | — | — | — | 88 | — | 88 | 91 | (3 | ) | ||||||||||||||||||||||||||
Miscellaneous | 3,235 | 2 | — | — | — | 145 | 3,382 | 3,244 | 138 | |||||||||||||||||||||||||||
Total | $ | 10,566 | $ | 3,576 | $ | 461 | $ | 1,633 | $ | 88 | $ | 145 | $ | 16,469 | $ | 15,891 | $ | 578 | ||||||||||||||||||
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Average | ||||||||||||||||||||||||||||||||
Issue | Fair | Book | Underlying | Delinq. | Subord. | S&P | Moody’s | |||||||||||||||||||||||||
Security Description | Date | Value | Value | LTV % | Rate | Level | Rating | Rating | ||||||||||||||||||||||||
($ in thousands) | ||||||||||||||||||||||||||||||||
Wachovia Bank Comm Mtg 05 C18 A4 | 2005 | $ | 6,806 | $ | 6,859 | 72.18 | % | 8.80 | % | 32.07 | % | AAA | Aaa | |||||||||||||||||||
GS Mtg Secs Corp II 05 GG4 A4A | 2005 | 6,487 | 6,608 | 71.96 | % | 7.15 | % | 30.86 | % | AAA | Aaa | |||||||||||||||||||||
Four Times Square 06-4TS A | 2006 | 5,943 | 7,029 | 39.40 | % | 0.00 | % | 7.94 | % | AAA | Aa1 | |||||||||||||||||||||
Citigroup/Deutsche Bank Comm Mtg 05 CD1 A4 | 2005 | 5,840 | 5,867 | 68.74 | % | 8.73 | % | 30.97 | % | AAA | Aaa | |||||||||||||||||||||
LB-UBS Comm Mtg Trust 06 C7 A3 | 2006 | 5,775 | 6,330 | 66.98 | % | 6.06 | % | 29.99 | % | AAA | NR | |||||||||||||||||||||
Bear Stearns Comm Mtg Secs 06 T22 A4 | 2006 | 4,933 | 4,883 | 57.39 | % | 0.41 | % | 28.20 | % | NR | Aaa | |||||||||||||||||||||
Bear Stearns Comm Mtg Secs 07 PW15 A4 | 2007 | 4,414 | 5,135 | 69.96 | % | 17.44 | % | 30.31 | % | A+ | Aaa | |||||||||||||||||||||
Banc Of America Comm Mtg Inc 07 1 A4 | 2007 | 4,189 | 4,780 | 74.54 | % | 13.28 | % | 30.49 | % | NR | Aaa | |||||||||||||||||||||
Morgan Stanley Capital I 07 HQ11 A4 | 2007 | 4,163 | 4,787 | 70.94 | % | 3.67 | % | 30.23 | % | A | Aaa | |||||||||||||||||||||
Merrill Lynch Mtg Trust 05 CIP1 A4 | 2005 | 3,936 | 4,035 | 70.86 | % | 14.00 | % | 31.01 | % | NR | Aaa | |||||||||||||||||||||
Commercial Mtg Pass Through Cert 05 C6 A5A | 2005 | 3,932 | 4,053 | 72.20 | % | 8.77 | % | 29.89 | % | AAA | Aaa | |||||||||||||||||||||
Morgan Stanley Capital I 04 T13 A4 | 2004 | 3,316 | 3,327 | 58.81 | % | 0.00 | % | 15.53 | % | NR | Aaa | |||||||||||||||||||||
Citigroup Comm Mtg Trust 06 C5 A4 | 2006 | 3,250 | 3,511 | 69.00 | % | 14.80 | % | 30.37 | % | NR | Aaa | |||||||||||||||||||||
GE Capital Comm Mtg Svcs 02 1A A3 | 2002 | 2,634 | 2,502 | 72.46 | % | 2.63 | % | 25.03 | % | NR | Aaa | |||||||||||||||||||||
CSFB Mtg Secs Corp 03 C3 A5 | 2003 | 2,559 | 2,523 | 62.03 | % | 3.49 | % | 20.69 | % | AAA | Aaa | |||||||||||||||||||||
Subtotal | 68,177 | 72,229 | ||||||||||||||||||||||||||||||
All Other | 32,216 | 32,598 | ||||||||||||||||||||||||||||||
Total | $ | 100,393 | $ | 104,827 | ||||||||||||||||||||||||||||
Percent | ||||||||||
Rating | Fair | of | ||||||||
Description | Rating | Value | Total | |||||||
($ in thousands) | ||||||||||
Extremely Strong | AAA | $ | 1,124,403 | 57 | % | |||||
Very Strong | AA | 494,764 | 25 | % | ||||||
Strong | A | 275,016 | 14 | % | ||||||
Adequate | BBB | 67,400 | 3 | % | ||||||
Speculative | BB & below | 24,656 | 1 | % | ||||||
Not Rated | NR | 7,229 | 0 | % | ||||||
Total | AA | $ | 1,993,468 | 100 | % | |||||
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Gross | Gross | Cost or | ||||||||||||||||
Fair | Unrealized | Unrealized | Amortized | S&P | ||||||||||||||
Value | Gains | (Losses) | Cost | Rating | ||||||||||||||
($ in thousands) | ||||||||||||||||||
Issuers: | ||||||||||||||||||
General Electric | $ | 20,475 | $ | 777 | $ | (9 | ) | $ | 19,707 | AA | ||||||||
Southern Co | 11,797 | 149 | (159 | ) | 11,807 | A | ||||||||||||
Conoco Phillips | 11,428 | 225 | — | 11,203 | A | |||||||||||||
Goldman Sachs Group | 10,927 | 258 | — | 10,669 | A- | |||||||||||||
Bank of America Corp | 8,823 | 248 | (33 | ) | 8,608 | A- | ||||||||||||
Transcanada Corp | 8,445 | 349 | — | 8,096 | A- | |||||||||||||
Citigroup Inc | 6,912 | 129 | (170 | ) | 6,953 | BBB+ | ||||||||||||
JP Morgan Chase & Co | 6,345 | 44 | — | 6,301 | A | |||||||||||||
Statoilhydro ASA | 5,830 | 277 | — | 5,553 | AA- | |||||||||||||
Wells Fargo & Co | 5,216 | 243 | (25 | ) | 4,998 | A+ | ||||||||||||
Scana Corp | 5,206 | 105 | — | 5,101 | A- | |||||||||||||
Morgan Stanley | 5,112 | 184 | — | 4,928 | A- | |||||||||||||
Mead Johnson Nutrition Co | 4,943 | — | (35 | ) | 4,978 | BBB- | ||||||||||||
Bank of New York | 3,658 | 190 | — | 3,468 | A+ | |||||||||||||
Pfizer Inc | 3,623 | 300 | — | 3,323 | A+ | |||||||||||||
Subtotal | 118,740 | 3,478 | (431 | ) | 115,693 | |||||||||||||
All Other | 118,121 | 5,633 | (328 | ) | 112,816 | |||||||||||||
Total | $ | 236,861 | $ | 9,111 | $ | (759 | ) | $ | 228,509 | |||||||||
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Gross | Gross | Cost or | ||||||||||||||
Fair | Unrealized | Unrealized | Amortized | |||||||||||||
Value | Gains | (Losses) | Cost | |||||||||||||
($ in thousands) | ||||||||||||||||
Issuers: | ||||||||||||||||
Vanguard Total Stock Market Index | $ | 4,656 | $ | 1,361 | $ | — | $ | 3,295 | ||||||||
Vanguard Emerging Market Stock Index | 4,207 | 1,771 | — | 2,436 | ||||||||||||
Vanguard Pacific Stock Index | 3,967 | 1,041 | — | 2,926 | ||||||||||||
Vanguard European Stock Index | 3,883 | 1,292 | — | 2,591 | ||||||||||||
PPG Industries | 1,818 | 626 | — | 1,192 | ||||||||||||
3M Co | 1,794 | 553 | — | 1,241 | ||||||||||||
Merck & Co Inc | 1,782 | 462 | — | 1,320 | ||||||||||||
The Boeing Co | 1,719 | 327 | — | 1,392 | ||||||||||||
Kraft Foods Inc | 1,713 | 211 | — | 1,502 | ||||||||||||
Philip Morris International Inc | 1,711 | 352 | — | 1,359 | ||||||||||||
EI Du Pont De Nemours & Co | 1,705 | 404 | — | 1,301 | ||||||||||||
Diageo PLC | 1,704 | 512 | — | 1,192 | ||||||||||||
Unilever NV | 1,660 | 654 | — | 1,006 | ||||||||||||
BP PLC | 1,641 | 506 | — | 1,135 | ||||||||||||
Johnson & Johnson | 1,617 | 189 | — | 1,428 | ||||||||||||
Subtotal | 35,577 | 10,261 | — | 25,316 | ||||||||||||
All Other | 27,033 | 4,983 | (10 | ) | 22,060 | |||||||||||
Total | $ | 62,610 | $ | 15,244 | $ | (10 | ) | $ | 47,376 | |||||||
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December 31, 2009 | December 31, 2008 | |||||||||||||||||||||||
# of | Fair | Gross | # of | Fair | Gross | |||||||||||||||||||
Securities | Value | Unrealized Loss | Securities | Value | Unrealized Loss | |||||||||||||||||||
($ in thousands except # of securities) | ||||||||||||||||||||||||
Fixed Maturities: | ||||||||||||||||||||||||
U.S. Government Treasury bonds, agency bonds and foreign government bonds | ||||||||||||||||||||||||
0-6 Months | 24 | $ | 116,566 | $ | 597 | 4 | $ | 3,862 | $ | 145 | ||||||||||||||
7-12 Months | — | — | — | — | — | — | ||||||||||||||||||
> 12 Months | — | — | — | — | — | — | ||||||||||||||||||
Subtotal | 24 | 116,566 | 597 | 4 | 3,862 | 145 | ||||||||||||||||||
States, municipalities and political subdivisions | ||||||||||||||||||||||||
0-6 Months | 47 | 108,290 | 2,291 | 72 | 68,727 | 2,187 | ||||||||||||||||||
7-12 Months | 4 | 3,534 | 112 | 73 | 118,910 | 4,376 | ||||||||||||||||||
> 12 Months | 23 | 17,777 | 514 | 17 | 15,918 | 1,473 | ||||||||||||||||||
Subtotal | 74 | 129,601 | 2,917 | 162 | 203,555 | 8,036 | ||||||||||||||||||
Agency mortgage-backed securities | ||||||||||||||||||||||||
0-6 Months | 5 | 18,385 | 98 | 3 | 2,130 | 6 | ||||||||||||||||||
7-12 Months | — | — | — | 6 | 3,471 | 9 | ||||||||||||||||||
> 12 Months | — | — | — | 11 | 962 | 11 | ||||||||||||||||||
Subtotal | 5 | 18,385 | 98 | 20 | 6,563 | 26 | ||||||||||||||||||
Residential mortgage obligations | ||||||||||||||||||||||||
0-6 Months | — | — | — | — | — | — | ||||||||||||||||||
7-12 Months | — | — | — | 65 | 39,012 | 20,779 | ||||||||||||||||||
> 12 Months | 73 | 31,071 | 7,246 | 14 | 10,315 | 6,340 | ||||||||||||||||||
Subtotal | 73 | 31,071 | 7,246 | 79 | 49,327 | 27,119 | ||||||||||||||||||
Asset-backed securities | ||||||||||||||||||||||||
0-6 Months | — | — | — | 53 | 22,079 | 653 | ||||||||||||||||||
7-12 Months | — | — | — | 10 | 6,630 | 550 | ||||||||||||||||||
> 12 Months | 4 | 637 | 34 | 2 | 224 | 86 | ||||||||||||||||||
Subtotal | 4 | 637 | 34 | 65 | 28,933 | 1,289 | ||||||||||||||||||
Commercial mortgage-backed securities | ||||||||||||||||||||||||
0-6 Months | 11 | 28,103 | 324 | 6 | 6,461 | 280 | ||||||||||||||||||
7-12 Months | — | — | — | 21 | 31,505 | 5,628 | ||||||||||||||||||
> 12 Months | 21 | 45,135 | 4,704 | 26 | 54,717 | 14,442 | ||||||||||||||||||
Subtotal | 32 | 73,238 | 5,028 | 53 | 92,683 | 20,350 | ||||||||||||||||||
Corporate bonds | ||||||||||||||||||||||||
0-6 Months | 13 | 33,275 | 337 | 75 | 57,805 | 2,445 | ||||||||||||||||||
7-12 Months | — | — | — | 89 | 57,971 | 5,893 | ||||||||||||||||||
> 12 Months | 8 | 6,325 | 422 | 40 | 27,873 | 6,322 | ||||||||||||||||||
Subtotal | 21 | 39,600 | 759 | 204 | 143,649 | �� | 14,660 | |||||||||||||||||
Total fixed maturities | 233 | $ | 409,098 | $ | 16,679 | 587 | $ | 528,572 | $ | 71,625 | ||||||||||||||
Equity securities — common stocks | ||||||||||||||||||||||||
0-6 Months | — | $ | — | $ | — | 17 | $ | 8,991 | $ | 1,941 | ||||||||||||||
7-12 Months | — | — | — | 2 | 351 | 46 | ||||||||||||||||||
> 12 Months | 1 | 872 | 10 | — | — | — | ||||||||||||||||||
Total equity securities | 1 | $ | 872 | $ | 10 | 19 | $ | 9,342 | $ | 1,987 | ||||||||||||||
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Period for Which Fair Value is Less than 80% of Amortized Cost | ||||||||||||||||||||
6 months | ||||||||||||||||||||
Longer than 3 | or longer, less | |||||||||||||||||||
Less than 3 | months, less | than 12 | 12 months | |||||||||||||||||
months | than 6 months | months | or longer | Total | ||||||||||||||||
($ in thousands) | ||||||||||||||||||||
Fixed Maturities | $ | — | $ | — | $ | — | $ | (4,520 | ) | $ | (4,520 | ) | ||||||||
Equity Securities | — | — | — | — | — | |||||||||||||||
Total | $ | — | $ | — | $ | — | $ | (4,520 | ) | $ | (4,520 | ) | ||||||||
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Gross | ||||||||||||||||||||
Equivalent | Equivalent | Unrealized Loss | Fair Value | |||||||||||||||||
NAIC | S&P | Moody’s | Percent | Percent | ||||||||||||||||
Rating | Rating | Rating | Amount | of Total | Amount | of Total | ||||||||||||||
($ in thousands) | ||||||||||||||||||||
1 | AAA/AA/A | Aaa/Aa/A | $ | 9,979 | 59 | % | $ | 356,726 | 87 | % | ||||||||||
2 | BBB | Baa | 1,050 | 6 | % | 24,186 | 6 | % | ||||||||||||
3 | BB | Ba | 300 | 2 | % | 4,156 | 1 | % | ||||||||||||
4 | B | B | 2,979 | 18 | % | 11,630 | 3 | % | ||||||||||||
5 | CCC or lower | Caa or lower | 2,276 | 14 | % | 8,871 | 2 | % | ||||||||||||
6 | N/A | N/A | 95 | 1 | % | 3,529 | 1 | % | ||||||||||||
Total | $ | 16,679 | 100 | % | $ | 409,098 | 100 | % | ||||||||||||
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Gross | ||||||||||||||||
Unrealized Loss | Fair Value | |||||||||||||||
Percent | Percent | |||||||||||||||
Amount | of Total | Amount | of Total | |||||||||||||
($ in thousands) | ||||||||||||||||
Due in one year or less | $ | 23 | 0 | % | $ | 4,006 | 1 | % | ||||||||
Due after one year through five years | 596 | 4 | % | 109,756 | 27 | % | ||||||||||
Due after five years through ten years | 1,554 | 9 | % | 95,386 | 23 | % | ||||||||||
Due after ten years | 2,100 | 13 | % | 76,619 | 19 | % | ||||||||||
Mortgage- and asset-backed securities | 12,406 | 74 | % | 123,331 | 30 | % | ||||||||||
Total fixed income securities | $ | 16,679 | 100 | % | $ | 409,098 | 100 | % | ||||||||
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December 31, | ||||||||
2009 | 2008 | |||||||
($ in thousands) | ||||||||
Senior debt | $ | 114,010 | $ | 123,794 | ||||
Stockholders’ equity | 801,519 | 689,317 | ||||||
Total capitalization | $ | 915,529 | $ | 813,111 | ||||
Ratio of debt to total capitalization | 12.5 | % | 15.2 | % | ||||
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December 31, | ||||||||
2009 | 2008 | |||||||
($ in thousands) | ||||||||
Cash and investments | $ | 63,676 | $ | 52,149 | ||||
Investments in subsidiaries | 846,295 | 751,864 | ||||||
Goodwill and other intangible assets | 2,534 | 2,534 | ||||||
Other assets | 5,213 | 8,769 | ||||||
Total assets | $ | 917,718 | $ | 815,316 | ||||
7% Senior Notes | $ | 114,010 | $ | 123,794 | ||||
Accounts payable and other liabilities | 847 | 747 | ||||||
Accrued interest payable | 1,342 | 1,458 | ||||||
Deferred compensation payable | — | — | ||||||
Total liabilities | 116,199 | 125,999 | ||||||
Stockholders’ equity | 801,519 | 689,317 | ||||||
Total liabilities and stockholders’ equity | $ | 917,718 | $ | 815,316 | ||||
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98
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Interest Rate Shift in Basis Points | ||||||||||||||||||||
-100 | -50 | 0 | +50 | +100 | ||||||||||||||||
($ in thousands) | ||||||||||||||||||||
December 31, 2009: | ||||||||||||||||||||
Total market value | $ | 2,087,958 | $ | 2,040,514 | $ | 1,993,468 | $ | 1,946,821 | $ | 1,900,971 | ||||||||||
Market value change from base | 4.74 | % | 2.36 | % | -2.34 | % | -4.64 | % | ||||||||||||
Change in unrealized value | $ | 94,490 | $ | 47,046 | $ | — | $ | (46,647 | ) | $ | (92,497 | ) |
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100
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The Navigators Group, Inc.
February 26, 2010
101
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102
Table of Contents
a. | Financial Statements and Schedules:The financial statements and schedules that are listed in the accompanying Index to Consolidated Financial Statements and Schedules on page F-1. |
b. | Exhibits:The exhibits that are listed in the accompanying Index to Exhibits on the page which immediately follows page S-8. The exhibits include the management contracts and compensatory plans or arrangements required to be filed as exhibits to this Form 10-K by Item 601(a)(10)(iii) of Regulation S-K. |
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The Navigators Group, Inc. (Company) | ||||
Dated: February 26, 2010 | By: | /s/ FRANCIS W. MCDONNELL | ||
Francis W. McDonnell | ||||
Senior Vice President and Chief Financial Officer |
Name | Title | Date | ||
/s/ TERENCE N. DEEKS | Chairman | February 26, 2010 | ||
/s/ STANLEY A. GALANSKI | President and Chief Executive Officer (Principal Executive Officer) | February 26, 2010 | ||
/s/ FRANCIS W. MCDONNELL | Senior Vice President and Chief Financial Officer (Principal Financial Officer) | February 26, 2010 | ||
/s/ THOMAS C. CONNOLLY | Vice President and Treasurer Navigators Management Company (Principal Accounting Officer) | February 26, 2010 | ||
/s/ H.J. MERVYN BLAKENEY | Director | February 26, 2010 | ||
/s/ PETER A. CHENEY | Director | February 26, 2010 | ||
/s/ WILLIAM T. FORRESTER | Director | February 26, 2010 | ||
/s/ JOHN F. KIRBY | Director | February 26, 2010 | ||
/s/ MARC M. TRACT | Director | February 26, 2010 | ||
/s/ ROBERT F. WRIGHT | Director | February 26, 2010 |
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F-2 | ||
F-3 | ||
F-4 | ||
F-5 | ||
F-6 | ||
F-7 | ||
F-8 | ||
SCHEDULES: | ||
S-1 | ||
S-2 | ||
S-5 | ||
S-6 | ||
S-7 | ||
S-8 | ||
F-1
Table of Contents
The Navigators Group, Inc.
February 26, 2010
F-2
Table of Contents
December 31, | ||||||||
2009 | 2008 | |||||||
ASSETS | ||||||||
Investments and cash: | ||||||||
Fixed maturities, available-for-sale, at fair value (amortized cost: 2009, $1,777,983; 2008, $1,664,755) | $ | 1,816,669 | $ | 1,643,772 | ||||
Equity securities, available-for-sale, at fair value (cost: 2009, $47,376; 2008, $52,523) | 62,610 | 51,802 | ||||||
Short-term investments, at cost which approximates fair value | 176,799 | 220,684 | ||||||
Cash | 509 | 1,457 | ||||||
Total investments and cash | 2,056,587 | 1,917,715 | ||||||
Premiums receivable | 193,460 | 170,522 | ||||||
Prepaid reinsurance premiums | 162,344 | 188,874 | ||||||
Reinsurance recoverable on paid losses | 76,505 | 67,227 | ||||||
Reinsurance recoverable on unpaid losses and loss adjustment expenses | 807,352 | 853,793 | ||||||
Deferred policy acquisition costs | 56,575 | 47,618 | ||||||
Accrued investment income | 17,438 | 17,411 | ||||||
Goodwill and other intangible assets | 7,057 | 6,622 | ||||||
Current income tax receivable, net | 4,854 | — | ||||||
Deferred income tax, net | 31,222 | 54,736 | ||||||
Other assets | 40,600 | 25,062 | ||||||
Total assets | $ | 3,453,994 | $ | 3,349,580 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Liabilities: | ||||||||
Reserves for losses and loss adjustment expenses | $ | 1,920,286 | $ | 1,853,664 | ||||
Unearned premiums | 475,171 | 480,665 | ||||||
Reinsurance balances payable | 98,555 | 140,319 | ||||||
Senior notes | 114,010 | 123,794 | ||||||
Federal income taxes payable | — | 5,874 | ||||||
Accounts payable and other liabilities | 44,453 | 55,947 | ||||||
Total liabilities | 2,652,475 | 2,660,263 | ||||||
Stockholders’ equity: | ||||||||
Preferred stock, $.10 par value, authorized 1,000,000 shares, none issued | $ | — | $ | — | ||||
Common stock, $.10 par value, authorized 50,000,000 shares, issued 17,212,814 shares for 2009 and 17,080,826 shares for 2008 | 1,721 | 1,708 | ||||||
Additional paid-in capital | 304,505 | 298,872 | ||||||
Treasury stock, at cost (366,330 shares for 2009 and 224,754 shares for 2008) | (18,296 | ) | (11,540 | ) | ||||
Retained earnings | 469,934 | 406,776 | ||||||
Accumulated other comprehensive income (loss) | 43,655 | (6,499 | ) | |||||
Total stockholders’ equity | 801,519 | 689,317 | ||||||
Total liabilities and stockholders’ equity | $ | 3,453,994 | $ | 3,349,580 | ||||
F-3
Table of Contents
Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Gross written premiums | $ | 1,044,918 | $ | 1,084,922 | $ | 1,070,707 | ||||||
Revenues: | ||||||||||||
Net written premiums | $ | 701,255 | $ | 661,615 | $ | 645,796 | ||||||
Increase in unearned premiums | (17,892 | ) | (17,639 | ) | (43,819 | ) | ||||||
Net earned premiums | 683,363 | 643,976 | 601,977 | |||||||||
Commission income | 87 | 1,005 | 1,736 | |||||||||
Net investment income | 75,512 | 76,554 | 70,662 | |||||||||
Total other-than-temporary impairment losses | (29,265 | ) | (37,045 | ) | (655 | ) | ||||||
Portion of loss recognized in other | ||||||||||||
comprehensive income (before tax) | 17,388 | — | — | |||||||||
Net other-than-temporary impairment losses | ||||||||||||
recognized in earnings | (11,877 | ) | (37,045 | ) | (655 | ) | ||||||
Net realized gains (losses) | 9,217 | (1,254 | ) | 2,661 | ||||||||
Other income | 6,578 | 430 | 278 | |||||||||
Total revenues | 762,880 | 683,666 | 676,659 | |||||||||
Expenses: | ||||||||||||
Net losses and loss adjustment expenses | 435,998 | 393,131 | 340,592 | |||||||||
Commission expenses | 98,908 | 89,785 | 77,613 | |||||||||
Other operating expenses | 132,671 | 123,148 | 110,409 | |||||||||
Interest expense | 8,455 | 8,871 | 8,863 | |||||||||
Total expenses | 676,032 | 614,935 | 537,477 | |||||||||
Income before income taxes | 86,848 | 68,731 | 139,182 | |||||||||
Income tax expense | 23,690 | 17,039 | 43,562 | |||||||||
Net income | $ | 63,158 | $ | 51,692 | $ | 95,620 | ||||||
Net income per common share: | ||||||||||||
Basic | $ | 3.73 | $ | 3.08 | $ | 5.69 | ||||||
Diluted | $ | 3.65 | $ | 3.04 | $ | 5.62 | ||||||
Average common shares outstanding: | ||||||||||||
Basic | 16,935 | 16,802 | 16,812 | |||||||||
Diluted | 17,322 | 16,992 | 17,005 |
F-4
Table of Contents
Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Preferred Stock | ||||||||||||
Balance at beginning and end of year | $ | — | $ | — | $ | — | ||||||
Common stock | ||||||||||||
Balance at beginning of year | $ | 1,708 | $ | 1,687 | $ | 1,674 | ||||||
Shares issued under stock plans | 13 | 21 | 13 | |||||||||
Balance at end of year | $ | 1,721 | $ | 1,708 | $ | 1,687 | ||||||
Additional paid-in capital | ||||||||||||
Balance at beginning of year | $ | 298,872 | $ | 291,616 | $ | 286,732 | ||||||
Shares issued under stock plans | 5,633 | 7,256 | 4,884 | |||||||||
Balance at end of year | $ | 304,505 | $ | 298,872 | $ | 291,616 | ||||||
Treasury stock held at cost | ||||||||||||
Balance at beginning of year | $ | (11,540 | ) | $ | — | $ | — | |||||
Treasury stock acquired | (6,756 | ) | (11,540 | ) | — | |||||||
Balance at end of year | $ | (18,296 | ) | $ | (11,540 | ) | $ | — | ||||
Retained earnings | ||||||||||||
Balance at beginning of year | $ | 406,776 | $ | 355,084 | $ | 259,464 | ||||||
Net income | 63,158 | 51,692 | 95,620 | |||||||||
Balance at end of year | $ | 469,934 | $ | 406,776 | $ | 355,084 | ||||||
Accumulated other comprehensive income (loss) | ||||||||||||
Net unrealized gains (losses) on securities, net of tax | ||||||||||||
Balance at beginning of year | $ | (15,062 | ) | $ | 10,186 | $ | 849 | |||||
Change in year | 46,020 | (25,248 | ) | 9,337 | ||||||||
Balance at end of year | 30,958 | (15,062 | ) | 10,186 | ||||||||
Non-credit other-than-temporary impairment gains (losses), net of tax | ||||||||||||
Balance at beginning of year | — | — | — | |||||||||
Change in period | 4,000 | — | — | |||||||||
Balance at end of period | 4,000 | — | — | |||||||||
Cumulative translation adjustments, net of tax | ||||||||||||
Balance at beginning of year | 8,563 | 3,533 | 2,624 | |||||||||
Net adjustment | 134 | 5,030 | 909 | |||||||||
Balance at end of year | 8,697 | 8,563 | 3,533 | |||||||||
Balance at end of year | $ | 43,655 | $ | (6,499 | ) | $ | 13,719 | |||||
Total stockholders’ equity at end of year | $ | 801,519 | $ | 689,317 | $ | 662,106 | ||||||
F-5
Table of Contents
($ in thousands)
Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Net income | $ | 63,158 | $ | 51,692 | $ | 95,620 | ||||||
Other comprehensive income (loss): | ||||||||||||
Change in net unrealized gains (losses) on investments, net of tax expense (benefit) of $25,602, $(12,034) and $4,858 in 2009, 2008 and 2007, respectively(1) | 50,020 | (25,248 | ) | 9,337 | ||||||||
Change in foreign currency translation gains (losses), net of tax expense of $72, $2,709 and $490 in 2009, 2008 and 2007, respectively | 134 | 5,030 | 909 | |||||||||
Other comprehensive income (loss) | 50,154 | (20,218 | ) | 10,246 | ||||||||
Comprehensive income | $ | 113,312 | $ | 31,474 | $ | 105,866 | ||||||
(1) Disclosure of reclassification amount, net of tax: | ||||||||||||
Unrealized gains (losses) on investments arising during period | $ | 48,068 | $ | (50,142 | ) | $ | 10,643 | |||||
Less: reclassification adjustment for net realized gains (losses) included in net income | 5,882 | (768 | ) | 1,732 | ||||||||
reclassification adjustment for other-than-temporary impairment losses recognized in net income | (7,834 | ) | (24,126 | ) | (426 | ) | ||||||
Change in net unrealized gains (losses) on securities, net of tax | $ | 50,020 | $ | (25,248 | ) | $ | 9,337 | |||||
F-6
Table of Contents
Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Operating activities: | ||||||||||||
Net income | $ | 63,158 | $ | 51,692 | $ | 95,620 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Depreciation & amortization | 4,551 | 4,761 | 3,350 | |||||||||
Deferred income taxes | (2,285 | ) | (16,522 | ) | (4,401 | ) | ||||||
Net realized (gains) losses | 2,660 | 38,299 | (2,006 | ) | ||||||||
Changes in assets and liabilities: | ||||||||||||
Reinsurance recoverable on paid and unpaid losses and loss adjustment expenses | 42,781 | (48,314 | ) | 129,314 | ||||||||
Reserves for losses and loss adjustment expenses | 54,050 | 237,817 | 34,844 | |||||||||
Prepaid reinsurance premiums | 27,788 | (3,701 | ) | (8,410 | ) | |||||||
Unearned premium | (8,872 | ) | 20,183 | 52,131 | ||||||||
Premiums receivable | (20,447 | ) | (14,369 | ) | 2,470 | |||||||
Commissions receivable | 284 | 2,020 | 1,279 | |||||||||
Deferred policy acquisition costs | (8,394 | ) | 2,627 | (9,770 | ) | |||||||
Accrued investment income | (11 | ) | (1,822 | ) | (2,553 | ) | ||||||
Reinsurance balances payable | (42,808 | ) | (10,048 | ) | (34,342 | ) | ||||||
Current income taxes | (12,094 | ) | (798 | ) | 6,847 | |||||||
Other | 3,549 | (16,550 | ) | 20,270 | ||||||||
Net cash provided by operating activities | 103,910 | 245,275 | 284,643 | |||||||||
Investing activities: | ||||||||||||
Fixed maturities, available-for-sale | ||||||||||||
Redemptions and maturities | 135,374 | 131,674 | 156,730 | |||||||||
Sales | 473,913 | 186,106 | 218,044 | |||||||||
Purchases | (728,216 | ) | (473,295 | ) | (624,092 | ) | ||||||
Equity securities, available-for-sale | ||||||||||||
Sales | 18,899 | 22,041 | 30,702 | |||||||||
Purchases | (21,947 | ) | (40,746 | ) | (61,930 | ) | ||||||
Change in payable for securities | (15,836 | ) | (112 | ) | (428 | ) | ||||||
Net change in short-term investments | 47,821 | (61,431 | ) | 7,560 | ||||||||
Purchase of property and equipment | (2,781 | ) | (7,548 | ) | (8,804 | ) | ||||||
Net cash used in investing activities | (92,773 | ) | (243,311 | ) | (282,218 | ) | ||||||
Financing activities: | ||||||||||||
Purchase of treasury stock | (6,756 | ) | (11,540 | ) | — | |||||||
Purchase of Senior notes | (7,000 | ) | — | — | ||||||||
Proceeds of stock issued from employee stock purchase plan | 727 | 963 | 606 | |||||||||
Proceeds of stock issued from exercise of stock options | 944 | 3,014 | 1,627 | |||||||||
Net cash (used in) provided by financing activities | (12,085 | ) | (7,563 | ) | 2,233 | |||||||
Effect of exchange rate changes on foreign currency cash | — | — | (6 | ) | ||||||||
Increase (decrease) in cash | (948 | ) | (5,599 | ) | 4,652 | |||||||
Cash at beginning of year | 1,457 | 7,056 | 2,404 | |||||||||
Cash at end of year | $ | 509 | $ | 1,457 | $ | 7,056 | ||||||
Supplemental cash information: | ||||||||||||
Income taxes paid | $ | 37,089 | $ | 34,990 | $ | 40,046 | ||||||
Interest paid | 8,355 | 8,750 | 8,750 | |||||||||
Issuance of stock to directors | 210 | 200 | 181 |
F-7
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F-8
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F-9
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F-10
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F-11
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F-12
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F-13
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F-14
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F-15
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F-16
Table of Contents
Year Ended December 31, 2009 | ||||||||||||
Average | Net | |||||||||||
Net | Shares | Income | ||||||||||
Income | Outstanding | Per Share | ||||||||||
($ and shares in thousands, except net income per share) | ||||||||||||
Basic EPS: | ||||||||||||
Income available to common stockholders | $ | 63,158 | 16,935 | $ | 3.73 | |||||||
Effect of dilutive securities: | ||||||||||||
Stock options and grants | 387 | |||||||||||
Diluted EPS: | ||||||||||||
Income available to common stockholders | $ | 63,158 | 17,322 | $ | 3.65 |
Year Ended December 31, 2008 | ||||||||||||
Average | Net | |||||||||||
Net | Shares | Income | ||||||||||
Income | Outstanding | Per Share | ||||||||||
($ and shares in thousands, except net income per share) | ||||||||||||
Basic EPS: | ||||||||||||
Income available to common stockholders | $ | 51,692 | 16,802 | $ | 3.08 | |||||||
Effect of dilutive securities: | ||||||||||||
Stock options and grants | 190 | |||||||||||
Diluted EPS: | ||||||||||||
Income available to common stockholders | $ | 51,692 | 16,992 | $ | 3.04 |
Year Ended December 31, 2007 | ||||||||||||
Average | Net | |||||||||||
Net | Shares | Income | ||||||||||
Income | Outstanding | Per Share | ||||||||||
($ and shares in thousands, except net income per share) | ||||||||||||
Basic EPS: | ||||||||||||
Income available to common stockholders | $ | 95,620 | 16,812 | $ | 5.69 | |||||||
Effect of dilutive securities: | ||||||||||||
Stock options and grants | 193 | |||||||||||
Diluted EPS: | ||||||||||||
Income available to common stockholders | $ | 95,620 | 17,005 | $ | 5.62 |
F-17
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F-18
Table of Contents
• | The offshore energy business, formerly included in the “Marine and Energy” businesses of the Insurance Companies and Lloyd’s Operations, is now included in the Insurance Companies’ and Lloyd’s Operations’ “Property Casualty” businesses. |
• | The marine lines within both the Insurance Companies and Lloyd’s Operations are now presented as “Marine” instead of “Marine and Energy”, since the offshore energy business has now been reclassified to “Property Casualty”. |
• | Engineering and construction, European Property and other run-off business, formerly included in the “Other” category of business within the Insurance Companies and Lloyd’s Operations, are now included under “Property Casualty”. |
• | The “Middle Markets” business, formerly broken out separately in the Insurance Companies, is now included in the Insurance Companies’ “Property Casualty” business. |
F-19
Table of Contents
Year Ended December 31, 2009 | ||||||||||||||||
Insurance | Lloyd’s | |||||||||||||||
Companies | Operations | Corporate | Total | |||||||||||||
($ in thousands) | ||||||||||||||||
Gross written premiums | $ | 730,776 | $ | 314,142 | $ | — | $ | 1,044,918 | ||||||||
Net written premiums | 477,673 | 223,582 | — | 701,255 | ||||||||||||
Net earned premiums | 479,121 | 204,242 | — | 683,363 | ||||||||||||
Net losses and loss adjustment expenses | (304,672 | ) | (131,326 | ) | — | (435,998 | ) | |||||||||
Commission expenses | (61,949 | ) | (37,727 | ) | 768 | (98,908 | ) | |||||||||
Other operating expenses | (104,801 | ) | (27,896 | ) | — | (132,697 | ) | |||||||||
Commission income and other income (expense) | 3,498 | 961 | (768 | ) | 3,691 | |||||||||||
Underwriting profit | 11,197 | 8,254 | — | 19,451 | ||||||||||||
Net investment income | 65,717 | 9,229 | 566 | 75,512 | ||||||||||||
Net realized gains (losses) | 533 | (3,193 | ) | — | (2,660 | ) | ||||||||||
Other operating expenses | — | — | 26 | 26 | ||||||||||||
Other income (expense) | — | — | 2,974 | 2,974 | ||||||||||||
Interest expense | — | — | (8,455 | ) | (8,455 | ) | ||||||||||
Income (loss) before income tax expense (benefit) | 77,447 | 14,290 | (4,889 | ) | 86,848 | |||||||||||
Income tax expense (benefit) | 19,819 | 5,582 | (1,711 | ) | 23,690 | |||||||||||
Net income (loss) | $ | 57,628 | $ | 8,708 | $ | (3,178 | ) | $ | 63,158 | |||||||
Identifiable assets(1) | $ | 2,554,037 | $ | 799,577 | $ | 71,422 | $ | 3,453,994 | ||||||||
Loss and loss expenses ratio | 63.6 | % | 64.3 | % | 63.8 | % | ||||||||||
Commission expense ratio | 12.9 | % | 18.5 | % | 14.5 | % | ||||||||||
Other operating expenses ratio(2) | 21.1 | % | 13.2 | % | 18.9 | % | ||||||||||
Combined ratio | 97.6 | % | 96.0 | % | 97.2 | % | ||||||||||
(1) | Includes inter-segment transactions causing the row not to cross foot. | |
(2) | IncludesOther operating expensesandCommission income and other income (expense). |
F-20
Table of Contents
Year Ended December 31, 2009 | ||||||||||||
Insurance | Lloyd’s | |||||||||||
Companies | Operations | Total | ||||||||||
($ in thousands) | ||||||||||||
Gross written premiums: | ||||||||||||
Marine | $ | 241,438 | $ | 191,959 | $ | 433,397 | ||||||
Property Casualty | 352,285 | 78,151 | 430,436 | |||||||||
Professional Liability | 137,053 | 44,032 | 181,085 | |||||||||
Total | $ | 730,776 | $ | 314,142 | $ | 1,044,918 | ||||||
Net written premiums: | ||||||||||||
Marine | $ | 171,289 | $ | 156,153 | $ | 327,442 | ||||||
Property Casualty | 227,234 | 45,097 | 272,331 | |||||||||
Professional Liability | 79,150 | 22,332 | 101,482 | |||||||||
Total | $ | 477,673 | $ | 223,582 | $ | 701,255 | ||||||
Net earned premiums: | ||||||||||||
Marine | $ | 157,534 | $ | 142,958 | $ | 300,492 | ||||||
Property Casualty | 246,143 | 39,330 | 285,473 | |||||||||
Professional Liability | 75,444 | 21,954 | 97,398 | |||||||||
Total | $ | 479,121 | $ | 204,242 | $ | 683,363 | ||||||
F-21
Table of Contents
Year Ended December 31, 2008 | ||||||||||||||||
Insurance | Lloyd’s | |||||||||||||||
Companies | Operations | Corporate | Total | |||||||||||||
($ in thousands) | ||||||||||||||||
Gross written premiums | $ | 762,190 | $ | 322,732 | $ | — | $ | 1,084,922 | ||||||||
Net written premiums | 472,688 | 188,927 | — | 661,615 | ||||||||||||
Net earned premiums | 463,298 | 180,678 | — | 643,976 | ||||||||||||
Net losses and loss adjustment expenses | (275,767 | ) | (117,364 | ) | — | (393,131 | ) | |||||||||
Commission expenses | (55,752 | ) | (34,033 | ) | — | (89,785 | ) | |||||||||
Other operating expenses | (92,297 | ) | (30,961 | ) | 110 | (123,148 | ) | |||||||||
Commission income and other income (expense) | 2,145 | (600 | ) | (110 | ) | 1,435 | ||||||||||
Underwriting profit (loss) | 41,627 | (2,280 | ) | — | 39,347 | |||||||||||
Net investment income | 63,544 | 11,655 | 1,355 | 76,554 | ||||||||||||
Net realized gains (losses) | (37,822 | ) | (477 | ) | — | (38,299 | ) | |||||||||
Interest expense | — | — | (8,871 | ) | (8,871 | ) | ||||||||||
Income (loss) before income tax expense (benefit) | 67,349 | 8,898 | (7,516 | ) | 68,731 | |||||||||||
Income tax expense (benefit) | 16,401 | 3,269 | (2,631 | ) | 17,039 | |||||||||||
Net income (loss) | $ | 50,948 | $ | 5,629 | $ | (4,885 | ) | $ | 51,692 | |||||||
Identifiable assets(1) | $ | 2,477,139 | $ | 779,800 | $ | 63,452 | $ | 3,349,580 | ||||||||
Loss and loss expenses ratio | 59.5 | % | 65.0 | % | 61.0 | % | ||||||||||
Commission expense ratio | 12.0 | % | 18.8 | % | 13.9 | % | ||||||||||
Other operating expenses ratio(2) | 19.5 | % | 17.5 | % | 18.9 | % | ||||||||||
Combined ratio | 91.0 | % | 101.3 | % | 93.8 | % | ||||||||||
(1) | Includes inter-segment transactions causing the row not to cross foot. | |
(2) | IncludesOther operating expensesandCommission income and other income (expense). |
F-22
Table of Contents
Year Ended December 31, 2008 | ||||||||||||
Insurance | Lloyd’s | |||||||||||
Companies | Operations | Total | ||||||||||
($ in thousands) | ||||||||||||
Gross written premiums: | ||||||||||||
Marine | $ | 248,080 | $ | 192,568 | $ | 440,648 | ||||||
Property Casualty | 405,062 | 91,292 | 496,354 | |||||||||
Professional Liability | 109,048 | 38,872 | 147,920 | |||||||||
Total | $ | 762,190 | $ | 322,732 | $ | 1,084,922 | ||||||
Net written premiums: | ||||||||||||
Marine | $ | 147,569 | $ | 132,788 | $ | 280,357 | ||||||
Property Casualty | 261,322 | 32,735 | 294,057 | |||||||||
Professional Liability | 63,797 | 23,404 | 87,201 | |||||||||
Total | $ | 472,688 | $ | 188,927 | $ | 661,615 | ||||||
Net earned premiums: | ||||||||||||
Marine | $ | 132,005 | $ | 126,126 | $ | 258,131 | ||||||
Property Casualty | 273,977 | 32,644 | 306,621 | |||||||||
Professional Liability | 57,316 | 21,908 | 79,224 | |||||||||
Total | $ | 463,298 | $ | 180,678 | $ | 643,976 | ||||||
F-23
Table of Contents
Year Ended December 31, 2007 | ||||||||||||||||
Insurance | Lloyd’s | |||||||||||||||
Companies | Operations | Corporate | Total | |||||||||||||
($ in thousands) | ||||||||||||||||
Gross written premiums | $ | 774,346 | $ | 296,361 | $ | — | $ | 1,070,707 | ||||||||
Net written premiums | 478,018 | 167,778 | — | 645,796 | ||||||||||||
Net earned premiums | 443,456 | 158,521 | — | 601,977 | ||||||||||||
Net losses and loss adjustment expenses | (256,652 | ) | (83,940 | ) | — | (340,592 | ) | |||||||||
Commission expenses | (52,490 | ) | (25,123 | ) | — | (77,613 | ) | |||||||||
Other operating expenses | (81,053 | ) | (29,356 | ) | — | (110,409 | ) | |||||||||
Commission income and other income (expense) | 1,510 | 504 | — | 2,014 | ||||||||||||
Underwriting profit (loss) | 54,771 | 20,606 | — | 75,377 | ||||||||||||
Net investment income | 58,261 | 10,524 | 1,877 | 70,662 | ||||||||||||
Net realized gains (losses) | 1,973 | 33 | — | 2,006 | ||||||||||||
Interest expense | — | — | (8,863 | ) | (8,863 | ) | ||||||||||
Income before income tax expense (benefit) | 115,005 | 31,163 | (6,986 | ) | 139,182 | |||||||||||
Income tax expense (benefit) | 35,061 | 10,946 | (2,445 | ) | 43,562 | |||||||||||
Net income (loss) | $ | 79,944 | $ | 20,217 | $ | (4,541 | ) | $ | 95,620 | |||||||
Identifiable assets(1) | $ | 2,322,647 | $ | 744,002 | $ | 53,501 | $ | 3,143,771 | ||||||||
Loss and loss expenses ratio | 57.9 | % | 53.0 | % | 56.6 | % | ||||||||||
Commission expense ratio | 11.8 | % | 15.8 | % | 12.9 | % | ||||||||||
Other operating expense ratio(2) | 17.9 | % | 18.2 | % | 18.0 | % | ||||||||||
Combined ratio | 87.6 | % | 87.0 | % | 87.5 | % | ||||||||||
(1) | Includes inter-segment transactions causing the row not to cross foot. | |
(2) | IncludesOther operating expensesandCommission income and other income (expense). |
F-24
Table of Contents
Year Ended December 31, 2007 | ||||||||||||
Insurance | Lloyd’s | |||||||||||
Companies | Operations | Total | ||||||||||
($ in thousands) | ||||||||||||
Gross written premium: | ||||||||||||
Marine | $ | 227,175 | $ | 175,567 | $ | 402,742 | ||||||
Property Casualty | 447,615 | 86,513 | 534,128 | |||||||||
Professional Liability | 99,556 | 34,281 | 133,837 | |||||||||
Total | $ | 774,346 | $ | 296,361 | $ | 1,070,707 | ||||||
Net written premium: | ||||||||||||
Marine | $ | 117,294 | $ | 110,577 | $ | 227,871 | ||||||
Property Casualty | 301,607 | 33,852 | 335,459 | |||||||||
Professional Liability | 59,117 | 23,349 | 82,466 | |||||||||
Total | $ | 478,018 | $ | 167,778 | $ | 645,796 | ||||||
Net earned premium: | ||||||||||||
Marine | $ | 112,370 | $ | 111,380 | $ | 223,750 | ||||||
Property Casualty | 275,937 | 29,482 | 305,419 | |||||||||
Professional Liability | 55,149 | 17,659 | 72,808 | |||||||||
Total | $ | 443,456 | $ | 158,521 | $ | 601,977 | ||||||
F-25
Table of Contents
Gross | Gross | OTTI | ||||||||||||||||||
Unrealized | Unrealized | Cost or | Recognized | |||||||||||||||||
December 31, 2009 | Fair Value | Gains | (Losses) | Amortized Cost | in OCI | |||||||||||||||
($ in thousands) | ||||||||||||||||||||
U.S. Government Treasury bonds, agency bonds and foreign government bonds | $ | 471,598 | $ | 7,397 | $ | (597 | ) | $ | 464,798 | $ | — | |||||||||
States, municipalities and political subdivisions | 676,699 | 25,044 | (2,917 | ) | 654,572 | — | ||||||||||||||
Mortgage- and asset-backed securities: | ||||||||||||||||||||
Agency mortgage-backed securities | 283,578 | 12,607 | (98 | ) | 271,069 | — | ||||||||||||||
Residential mortgage obligations | 31,071 | — | (7,246 | ) | 38,317 | (5,723 | ) | |||||||||||||
Asset-backed securities | 16,469 | 612 | (34 | ) | 15,891 | (23 | ) | |||||||||||||
Commercial mortgage-backed securities | 100,393 | 594 | (5,028 | ) | 104,827 | — | ||||||||||||||
Subtotal | 431,511 | 13,813 | (12,406 | ) | 430,104 | (5,746 | ) | |||||||||||||
Corporate bonds | 236,861 | 9,111 | (759 | ) | 228,509 | — | ||||||||||||||
Total fixed maturities | 1,816,669 | 55,365 | (16,679 | ) | 1,777,983 | (5,746 | ) | |||||||||||||
Equity securities — common stocks | 62,610 | 15,244 | (10 | ) | 47,376 | — | ||||||||||||||
Cash | 509 | — | — | 509 | — | |||||||||||||||
Short-term investments | 176,799 | — | — | 176,799 | — | |||||||||||||||
Total | $ | 2,056,587 | $ | 70,609 | $ | (16,689 | ) | $ | 2,002,667 | $ | (5,746 | ) | ||||||||
F-26
Table of Contents
Gross | Gross | |||||||||||||||
Unrealized | Unrealized | Cost or | ||||||||||||||
December 31, 2008 | Fair Value | Gains | (Losses) | Amortized Cost | ||||||||||||
($ in thousands) | ||||||||||||||||
U.S. Government Treasury bonds, agency bonds and foreign government bonds | $ | 361,656 | $ | 25,741 | $ | (145 | ) | $ | 336,060 | |||||||
States, municipalities and political subdivisions | 614,609 | 12,568 | (8,036 | ) | 610,077 | |||||||||||
Mortgage- and asset-backed securities: | ||||||||||||||||
Agency mortgage-backed securities | 299,775 | 10,930 | (26 | ) | 288,871 | |||||||||||
Residential mortgage obligations | 56,743 | — | (27,119 | ) | 83,862 | |||||||||||
Asset-backed securities | 29,436 | 5 | (1,289 | ) | 30,720 | |||||||||||
Commercial mortgage-backed securities | 92,684 | — | (20,350 | ) | 113,034 | |||||||||||
Subtotal | 478,638 | 10,935 | (48,784 | ) | 516,487 | |||||||||||
Corporate bonds | 188,869 | 1,398 | (14,660 | ) | 202,131 | |||||||||||
Total fixed maturities | 1,643,772 | 50,642 | (71,625 | ) | 1,664,755 | |||||||||||
Equity securities — common stocks | 51,802 | 1,266 | (1,987 | ) | 52,523 | |||||||||||
Cash | 1,457 | — | — | 1,457 | ||||||||||||
Short-term investments | 220,684 | — | — | 220,684 | ||||||||||||
Total | $ | 1,917,715 | $ | 51,908 | $ | (73,612 | ) | $ | 1,939,419 | |||||||
• | Level 1 — Quoted prices for identical instruments in active markets. Examples are listed equity and fixed income securities traded on an exchange. Treasury securities would generally be considered level 1. |
• | Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Examples are asset-backed and mortgage-backed securities which are similar to other asset-backed or mortgage-backed securities observed in the market. |
• | Level 3 — Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. An example would be a private placement with minimal liquidity. |
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Table of Contents
Quoted Prices | Significant | |||||||||||||||
In Active | Other | Significant | ||||||||||||||
Markets for | Observable | Unobservable | ||||||||||||||
Identical Assets | Inputs | Inputs | ||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
($ in thousands) | ||||||||||||||||
Fixed maturities | $ | 331,925 | $ | 1,484,744 | $ | — | $ | 1,816,669 | ||||||||
Equity securities | 62,610 | — | — | 62,610 | ||||||||||||
Short-term investments | 9,992 | 166,807 | — | 176,799 | ||||||||||||
Total | $ | 404,527 | $ | 1,651,551 | $ | — | $ | 2,056,078 | ||||||||
Quoted Prices | Significant | |||||||||||||||
In Active | Other | Significant | ||||||||||||||
Markets for | Observable | Unobservable | ||||||||||||||
Identical Assets | Inputs | Inputs | ||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
($ in thousands) | ||||||||||||||||
Fixed maturities | $ | 271,392 | $ | 1,372,224 | $ | 156 | $ | 1,643,772 | ||||||||
Equity securities | 51,802 | — | — | 51,802 | ||||||||||||
Short-term investments | 59,957 | 160,727 | — | 220,684 | ||||||||||||
Total | $ | 383,151 | $ | 1,532,951 | $ | 156 | $ | 1,916,258 | ||||||||
F-28
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Twelve Months Ended | ||||
($ in thousands) | December 31, 2009 | |||
Level 3 investments as of January 1 | $ | 156 | ||
Unrealized net gains included in other comprehensive income (loss) | 23 | |||
Purchases, sales, paydowns and amortization | (23 | ) | ||
Transfer from Level 3 | (156 | ) | ||
Transfer to Level 3 | — | |||
Level 3 investments as of December 31 | $ | — | ||
Twelve Months Ended | ||||
December 31, 2008 | ||||
($ in thousands) | ||||
Level 3 investments as of January 1 | $ | 2,603 | ||
Unrealized net gains included in other comprehensive income (loss) | (94 | ) | ||
Purchases, sales, paydowns and amortization | (704 | ) | ||
Transfer from Level 3 | (1,979 | ) | ||
Transfer to Level 3 | 330 | |||
Level 3 investments as of December 31 | $ | 156 | ||
Percent | ||||||||||||
Rating | Fair | of | ||||||||||
Description | Rating | Value | Total | |||||||||
($ in thousands) | ||||||||||||
Extremely Strong | AAA | $ | 1,124,403 | 57 | % | |||||||
Very Strong | AA | 494,764 | 25 | % | ||||||||
Strong | A | 275,016 | 14 | % | ||||||||
Adequate | BBB | 67,400 | 3 | % | ||||||||
Speculative | BB & below | 24,656 | 1 | % | ||||||||
Not Rated | NR | 7,229 | 0 | % | ||||||||
Total | AA | $ | 1,993,468 | 100 | % | |||||||
F-29
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Period from | ||||||||
December 31, 2009 | Fair | Amortized | ||||||
to Maturity | Value | Cost | ||||||
($ in thousands) | ||||||||
Due in one year or less | $ | 135,927 | $ | 134,614 | ||||
Due after one year through five years | 561,016 | 542,206 | ||||||
Due after five years through ten years | 371,156 | 359,966 | ||||||
Due after ten years | 317,059 | 311,093 | ||||||
Mortgage- and asset-backed (including GNMAs) | 431,511 | 430,104 | ||||||
Total | $ | 1,816,669 | $ | 1,777,983 | ||||
F-30
Table of Contents
December 31, 2009 | December 31, 2008 | |||||||||||||||||||||||
# of | Fair | Gross | # of | Fair | Gross | |||||||||||||||||||
Securities | Value | Unrealized Loss | Securities | Value | Unrealized Loss | |||||||||||||||||||
($ in thousands except # of securities) | ||||||||||||||||||||||||
Fixed Maturities: | ||||||||||||||||||||||||
U.S. Government Treasury bonds, agency bonds and foreign government bonds | ||||||||||||||||||||||||
0-6 Months | 24 | $ | 116,566 | $ | 597 | 4 | $ | 3,862 | $ | 145 | ||||||||||||||
7-12 Months | — | — | — | — | — | — | ||||||||||||||||||
> 12 Months | — | — | — | — | — | — | ||||||||||||||||||
Subtotal | 24 | 116,566 | 597 | 4 | 3,862 | 145 | ||||||||||||||||||
States, municipalities and political subdivisions | ||||||||||||||||||||||||
0-6 Months | 47 | 108,290 | 2,291 | 72 | 68,727 | 2,187 | ||||||||||||||||||
7-12 Months | 4 | 3,534 | 112 | 73 | 118,910 | 4,376 | ||||||||||||||||||
> 12 Months | 23 | 17,777 | 514 | 17 | 15,918 | 1,473 | ||||||||||||||||||
Subtotal | 74 | 129,601 | 2,917 | 162 | 203,555 | 8,036 | ||||||||||||||||||
Agency mortgage-backed securities | ||||||||||||||||||||||||
0-6 Months | 5 | 18,385 | 98 | 3 | 2,130 | 6 | ||||||||||||||||||
7-12 Months | — | — | — | 6 | 3,471 | 9 | ||||||||||||||||||
> 12 Months | — | — | — | 11 | 962 | 11 | ||||||||||||||||||
Subtotal | 5 | 18,385 | 98 | 20 | 6,563 | 26 | ||||||||||||||||||
Residential mortgage obligations | ||||||||||||||||||||||||
0-6 Months | — | — | — | — | — | — | ||||||||||||||||||
7-12 Months | — | — | — | 65 | 39,012 | 20,779 | ||||||||||||||||||
> 12 Months | 73 | 31,071 | 7,246 | 14 | 10,315 | 6,340 | ||||||||||||||||||
Subtotal | 73 | 31,071 | 7,246 | 79 | 49,327 | 27,119 | ||||||||||||||||||
Asset-backed securities | ||||||||||||||||||||||||
0-6 Months | — | — | — | 53 | 22,079 | 653 | ||||||||||||||||||
7-12 Months | — | — | — | 10 | 6,630 | 550 | ||||||||||||||||||
> 12 Months | 4 | 637 | 34 | 2 | 224 | 86 | ||||||||||||||||||
Subtotal | 4 | 637 | 34 | 65 | 28,933 | 1,289 | ||||||||||||||||||
Commercial mortgage-backed securities | ||||||||||||||||||||||||
0-6 Months | 11 | 28,103 | 324 | 6 | 6,461 | 280 | ||||||||||||||||||
7-12 Months | — | — | — | 21 | 31,505 | 5,628 | ||||||||||||||||||
> 12 Months | 21 | 45,135 | 4,704 | 26 | 54,717 | 14,442 | ||||||||||||||||||
Subtotal | 32 | 73,238 | 5,028 | 53 | 92,683 | 20,350 | ||||||||||||||||||
Corporate bonds | ||||||||||||||||||||||||
0-6 Months | 13 | 33,275 | 337 | 75 | 57,805 | 2,445 | ||||||||||||||||||
7-12 Months | — | — | — | 89 | 57,971 | 5,893 | ||||||||||||||||||
> 12 Months | 8 | 6,325 | 422 | 40 | 27,873 | 6,322 | ||||||||||||||||||
Subtotal | 21 | 39,600 | 759 | 204 | 143,649 | 14,660 | ||||||||||||||||||
Total fixed maturities | 233 | $ | 409,098 | $ | 16,679 | 587 | $ | 528,572 | $ | 71,625 | ||||||||||||||
Equity securities — common stocks | ||||||||||||||||||||||||
0-6 Months | — | $ | — | $ | — | 17 | $ | 8,991 | $ | 1,941 | ||||||||||||||
7-12 Months | — | — | — | 2 | 351 | 46 | ||||||||||||||||||
> 12 Months | 1 | 872 | 10 | — | — | — | ||||||||||||||||||
Total equity securities | 1 | $ | 872 | $ | 10 | 19 | $ | 9,342 | $ | 1,987 | ||||||||||||||
F-31
Table of Contents
($ in thousands) | ||||
Beginning balance of at January 1, 2009 | $ | — | ||
Credit losses on securities not previously impaired as of December 31, 2008 | 3,102 | |||
Reductions for securities sold during the period | (579 | ) | ||
Ending balance at December 31, 2009 | $ | 2,523 | ||
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Period for Which Fair Value is Less than 80% of Amortized Cost | ||||||||||||||||||||
6 months | ||||||||||||||||||||
Longer than 3 | or longer, less | |||||||||||||||||||
Less than 3 | months, less | than 12 | 12 months | |||||||||||||||||
months | than 6 months | months | or longer | Total | ||||||||||||||||
($ in thousands) | ||||||||||||||||||||
Fixed Maturities | $ | — | $ | — | $ | — | $ | (4,520 | ) | $ | (4,520 | ) | ||||||||
Equity Securities | — | — | — | — | — | |||||||||||||||
Total | $ | — | $ | — | $ | — | $ | (4,520 | ) | $ | (4,520 | ) | ||||||||
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Twelve Months Ended | ||||||||||||||||||||||||
December 31, | ||||||||||||||||||||||||
2009 | 2008 | 2007 | ||||||||||||||||||||||
($ in thousands) | No. | Amount | No. | Amount | No. | Amount | ||||||||||||||||||
Total other-than-temporary impairments | ||||||||||||||||||||||||
Corporate and other bonds | 2 | $ | 564 | 1 | $ | 748 | — | $ | — | |||||||||||||||
Commercial mortgage-backed securities | — | — | — | — | — | — | ||||||||||||||||||
Residential mortgage-backed securities | 39 | 19,783 | 4 | 7,856 | — | — | ||||||||||||||||||
Asset-backed securities | 1 | 143 | — | — | — | — | ||||||||||||||||||
Equities | 56 | 8,775 | 59 | 28,441 | 1 | 655 | ||||||||||||||||||
Total | 98 | $ | 29,265 | 64 | $ | 37,045 | 1 | $ | 655 | |||||||||||||||
Portion of loss in accumulated other comprehensive income (loss) | ||||||||||||||||||||||||
Corporate and other bonds | $ | — | $ | — | $ | — | ||||||||||||||||||
Commercial mortgage-backed securities | — | — | — | |||||||||||||||||||||
Residential mortgage-backed securities | 17,324 | — | — | |||||||||||||||||||||
Asset-backed securities | 64 | — | — | |||||||||||||||||||||
Equities | — | — | — | |||||||||||||||||||||
Total | $ | 17,388 | $ | — | $ | - | ||||||||||||||||||
Impairment losses recognized in earnings | ||||||||||||||||||||||||
Corporate and other bonds | $ | 564 | $ | 748 | $ | — | ||||||||||||||||||
Commercial mortgage-backed securities | — | — | — | |||||||||||||||||||||
Residential mortgage-backed securities | 2,459 | 7,856 | — | |||||||||||||||||||||
Asset-backed securities | 79 | — | — | |||||||||||||||||||||
Equities | 8,775 | 28,441 | 655 | |||||||||||||||||||||
Total | $ | 11,877 | $ | 37,045 | $ | 655 | ||||||||||||||||||
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Gross | ||||||||||||||||
Unrealized Loss | Fair Value | |||||||||||||||
Percent | Percent | |||||||||||||||
Amount | of Total | Amount | of Total | |||||||||||||
($ in thousands) | ||||||||||||||||
Due in one year or less | $ | 23 | 0 | % | $ | 4,006 | 1 | % | ||||||||
Due after one year through five years | 596 | 4 | % | 109,756 | 27 | % | ||||||||||
Due after five years through ten years | 1,554 | 9 | % | 95,386 | 23 | % | ||||||||||
Due after ten years | 2,100 | 13 | % | 76,619 | 19 | % | ||||||||||
Mortgage- and asset-backed securities | 12,406 | 74 | % | 123,331 | 30 | % | ||||||||||
Total fixed income securities | $ | 16,679 | 100 | % | $ | 409,098 | 100 | % | ||||||||
F-35
Table of Contents
Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
($ in thousands) | ||||||||||||
Fixed maturities | $ | 74,779 | $ | 73,493 | $ | 64,435 | ||||||
Equity securities | 2,464 | 2,359 | 1,767 | |||||||||
Short-term investments | 811 | 3,925 | 7,363 | |||||||||
78,054 | 79,777 | 73,565 | ||||||||||
Investment expenses | (2,542 | ) | (3,223 | ) | (2,903 | ) | ||||||
Net investment income | $ | 75,512 | $ | 76,554 | $ | 70,662 | ||||||
Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
($ in thousands) | ||||||||||||
Fixed maturities: | ||||||||||||
Gains | $ | 18,312 | $ | 3,650 | $ | 1,320 | ||||||
(Losses) | (9,676 | ) | (1,670 | ) | (1,749 | ) | ||||||
8,636 | 1,980 | (429 | ) | |||||||||
Equity securities: | ||||||||||||
Gains | 2,110 | 720 | 3,626 | |||||||||
(Losses) | (1,529 | ) | (3,954 | ) | (536 | ) | ||||||
581 | (3,234 | ) | 3,090 | |||||||||
Net realized gains (losses) | $ | 9,217 | $ | (1,254 | ) | $ | 2,661 | |||||
F-36
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Years ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Fixed maturity investments | $ | 59,667 | $ | (34,813 | ) | $ | 18,396 | |||||
Equity investments | 15,955 | (2,469 | ) | (4,201 | ) | |||||||
Total | 75,622 | (37,282 | ) | 14,195 | ||||||||
Deferred income tax (charged) credited | (25,602 | ) | 12,034 | (4,858 | ) | |||||||
Change in unrealized gains (losses), net | $ | 50,020 | $ | (25,248 | ) | $ | 9,337 | |||||
F-37
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F-38
Table of Contents
Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
($ in thousands) | ||||||||||||
Net reserves for losses and LAE at beginning of year | $ | 999,871 | $ | 847,303 | $ | 696,116 | ||||||
Provision for losses and LAE for claims occurring in the current year | 444,939 | 443,877 | 387,601 | |||||||||
Decrease in estimated losses and LAE for claims occurring in prior years | (8,941 | ) | (50,746 | ) | (47,009 | ) | ||||||
Incurred losses and LAE | 435,998 | 393,131 | 340,592 | |||||||||
Losses and LAE paid for claims occurring during: | ||||||||||||
Current year | (59,412 | ) | (60,104 | ) | (46,467 | ) | ||||||
Prior years | (263,523 | ) | (180,459 | ) | (142,938 | ) | ||||||
Losses and LAE payments | (322,935 | ) | (240,563 | ) | (189,405 | ) | ||||||
Net reserves for losses and LAE at end of year | 1,112,934 | 999,871 | 847,303 | |||||||||
Reinsurance recoverables on unpaid losses and LAE | 807,352 | 853,793 | 801,461 | |||||||||
Gross reserves for losses and LAE at end of year | $ | 1,920,286 | $ | 1,853,664 | $ | 1,648,764 | ||||||
Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
($ in thousands) | ||||||||||||
Insurance Companies | ||||||||||||
Marine | $ | 11,893 | $ | (5,298 | ) | $ | (11,595 | ) | ||||
Property Casualty | (35,658 | ) | (33,065 | ) | (11,836 | ) | ||||||
Professional Liability | 20,686 | (3,559 | ) | (10,365 | ) | |||||||
Insurance Companies | $ | (3,079 | ) | $ | (41,922 | ) | $ | (33,796 | ) | |||
Lloyd’s Operations | (5,862 | ) | (8,824 | ) | (13,213 | ) | ||||||
Total | $ | (8,941 | ) | $ | (50,746 | ) | $ | (47,009 | ) | |||
F-39
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F-40
Table of Contents
A.M. Best | Rating | Recoverable | Percent | |||||||||
Rating(1) | Description | Amounts | of Total | |||||||||
($ in millions) | ||||||||||||
A++, A+ | Superior | $ | 436.7 | 42 | % | |||||||
A, A- | Excellent | 585.2 | 56 | % | ||||||||
B++, B+ | Very good | 0.8 | 0 | %(2) | ||||||||
NR | Not rated | 23.5 | 2 | %(2) | ||||||||
Total | $ | 1,046.2 | 100 | % | ||||||||
(1) | Equivalent S&P rating used for certain companies when an A.M. Best rating was unavailable. | |
(2) | The Company holds offsetting collateral of approximately 102.1% for B++ and B+ companies and 71.8% for not rated companies which includes letters of credit, ceded balances payable and other balances held by our Insurance Companies and our Lloyd’s Operations. |
Reinsurance Recoverables | ||||||||||||||||||||||||
Unearned | Unpaid/Paid | Collateral | Rating & | |||||||||||||||||||||
Reinsurer | Premium | Losses | Total | Held (1) | Rating Agency | |||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||
Swiss Reinsurance America Corporation | $ | 9.0 | $ | 97.8 | $ | 106.8 | $ | 9.2 | A | AMB | (2) | |||||||||||||
Munich Reinsurance America Inc. | 26.1 | 60.3 | 86.4 | 16.2 | A+ | AMB | ||||||||||||||||||
Transatlantic Reinsurance Company | 21.7 | 49.3 | 71.0 | 9.5 | A | AMB | ||||||||||||||||||
White Mountains Reinsurance of America | 1.2 | 68.6 | 69.8 | 2.3 | A- | AMB | ||||||||||||||||||
Everest Reinsurance Company | 19.9 | 49.4 | 69.3 | 8.5 | A+ | AMB | ||||||||||||||||||
General Reinsurance Corporation | 1.5 | 58.3 | 59.8 | 1.7 | A++ | AMB | ||||||||||||||||||
Munchener Ruckversicherungs-Gesellschaft | 4.9 | 37.0 | 41.9 | 10.2 | A+ | AMB | ||||||||||||||||||
National Indemnity Company | 7.5 | 29.8 | 37.3 | 3.1 | A++ | AMB | ||||||||||||||||||
Platinum Underwriters Re | 4.2 | 26.8 | 31.0 | 2.6 | A | AMB | ||||||||||||||||||
Berkley Insurance Company | 8.1 | 21.1 | 29.2 | 1.5 | A+ | AMB | ||||||||||||||||||
Scor Holding (Switzerland) AG | 5.9 | 19.2 | 25.1 | 5.9 | A- | AMB | ||||||||||||||||||
Swiss Re International SE | 1.3 | 22.2 | 23.5 | 6.2 | A | AMB | ||||||||||||||||||
Partner Reinsurance Europe | 5.6 | 17.6 | 23.2 | 8.7 | AA- | S&P | ||||||||||||||||||
Lloyd’s Syndicate #2003 | 3.6 | 17.9 | 21.5 | 3.4 | A | AMB | ||||||||||||||||||
Partner Reinsurance Company of the U.S. | 1.0 | 19.6 | 20.6 | 0.1 | A+ | AMB | ||||||||||||||||||
Arch Reinsurance Company | 0.7 | 15.9 | 16.6 | 0.1 | A | AMB | ||||||||||||||||||
Hannover Ruckversicherung | 1.5 | 14.8 | 16.3 | 2.4 | A | AMB | ||||||||||||||||||
Ace Property and Casualty Insurance Company | 3.7 | 12.1 | 15.8 | 1.6 | A+ | AMB | ||||||||||||||||||
Allianz Global Corporate & Specialty AG | 0.2 | 14.4 | 14.6 | 4.2 | A+ | AMB | ||||||||||||||||||
Federal Insurance Co. | 0.6 | 10.7 | 11.3 | 1.0 | A++ | AMB | ||||||||||||||||||
Top 20 Total | 128.2 | 662.8 | 791.0 | 98.4 | ||||||||||||||||||||
All Other | 34.1 | 221.1 | 255.2 | 80.9 | ||||||||||||||||||||
Total | $ | 162.3 | $ | 883.9 | $ | 1,046.2 | $ | 179.3 | ||||||||||||||||
(1) | Collateral includes letters of credit, ceded balances payable and other balances held by our Insurance Companies and our Lloyd’s Operations. | |
(2) | A.M. Best |
F-41
Table of Contents
Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
($ in thousands) | ||||||||||||
Direct | $ | 966,251 | $ | 1,016,521 | $ | 989,652 | ||||||
Assumed | 78,667 | 68,401 | 81,055 | |||||||||
Ceded | (343,663 | ) | (423,307 | ) | (424,911 | ) | ||||||
Net | $ | 701,255 | $ | 661,615 | $ | 645,796 | ||||||
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Table of Contents
Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
($ in thousands) | ||||||||||||
Direct | $ | 977,170 | $ | 993,123 | $ | 940,447 | ||||||
Assumed | 78,932 | 69,989 | 78,164 | |||||||||
Ceded | (372,739 | ) | (419,136 | ) | (416,634 | ) | ||||||
Net | $ | 683,363 | $ | 643,976 | $ | 601,977 | ||||||
Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
($ in thousands) | ||||||||||||
Direct | $ | 625,558 | $ | 646,095 | $ | 532,445 | ||||||
Assumed | 44,318 | 38,013 | 18,314 | |||||||||
Ceded | (233,878 | ) | (290,977 | ) | (210,167 | ) | ||||||
Net | $ | 435,998 | $ | 393,131 | $ | 340,592 | ||||||
F-43
Table of Contents
The components of current and deferred income tax expense (benefit) were as follows: |
Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
($ in thousands) | ||||||||||||
Current income tax expense: | ||||||||||||
Federal and foreign | $ | 25,833 | $ | 33,126 | $ | 47,864 | ||||||
State and local | 142 | 435 | 99 | |||||||||
Subtotal | 25,975 | 33,561 | 47,963 | |||||||||
Deferred income tax benefit: | ||||||||||||
Federal and foreign | (2,285 | ) | (16,522 | ) | (4,401 | ) | ||||||
State and local | — | — | — | |||||||||
Subtotal | (2,285 | ) | (16,522 | ) | (4,401 | ) | ||||||
Total income tax expense | $ | 23,690 | $ | 17,039 | $ | 43,562 | ||||||
Year Ended December 31, | ||||||||||||||||||||||||
2009 | 2008 | 2007 | ||||||||||||||||||||||
($ in thousands) | ||||||||||||||||||||||||
Computed expected tax expense | $ | 30,397 | 35.0 | % | $ | 24,056 | 35.0 | % | $ | 48,714 | 35.0 | % | ||||||||||||
Tax-exempt interest | (7,051 | ) | -8.1 | % | (6,650 | ) | -9.7 | % | (4,736 | ) | -3.4 | % | ||||||||||||
Dividends received deduction | (508 | ) | -0.6 | % | (493 | ) | -0.7 | % | (345 | ) | -0.2 | % | ||||||||||||
Current state and local income taxes, net of federal income tax | 93 | 0.1 | % | 284 | 0.4 | % | 64 | 0.0 | % | |||||||||||||||
Change in the deferred state and local income tax, net of deferred tax assets | 3,546 | 4.1 | % | (154 | ) | -0.2 | % | (358 | ) | -0.3 | % | |||||||||||||
Change in the valuation allowance | (3,546 | ) | -4.1 | % | 154 | 0.2 | % | 358 | 0.3 | % | ||||||||||||||
Other | 759 | 0.9 | % | (158 | ) | -0.2 | % | (135 | ) | -0.1 | % | |||||||||||||
Actual tax expense and rate | $ | 23,690 | 27.3 | % | $ | 17,039 | 24.8 | % | $ | 43,562 | 31.3 | % | ||||||||||||
F-44
Table of Contents
December 31, | ||||||||
2009 | 2008 | |||||||
($ in thousands) | ||||||||
Deferred tax assets: | ||||||||
Loss reserve discount | $ | 31,798 | $ | 31,393 | ||||
Unearned premiums | 15,023 | 15,125 | ||||||
Realized losses | 19,327 | 12,735 | ||||||
Compensation related | 6,052 | 6,012 | ||||||
Net unrealized losses on securities | — | 6,640 | ||||||
State and local net deferred tax assets | 2,648 | 6,194 | ||||||
Other | 721 | 682 | ||||||
Total gross deferred tax assets | 75,569 | 78,781 | ||||||
Less: Valuation allowance | (2,648 | ) | (6,194 | ) | ||||
Total deferred tax assets | 72,921 | 72,587 | ||||||
Deferred tax liabilities: | ||||||||
Deferred acquisition costs | (12,205 | ) | (11,658 | ) | ||||
Net unrealized gains on securities | (18,962 | ) | — | |||||
Other | (10,532 | ) | (6,193 | ) | ||||
Total deferred tax liabilities | (41,699 | ) | (17,851 | ) | ||||
Net deferred income tax asset | $ | 31,222 | $ | 54,736 | ||||
F-45
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F-46
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F-47
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Year Ended December 31, | ($ in thousands) | |||
2010 | $ | 7,379 | ||
2011 | 7,892 | |||
2012 | 7,511 | |||
2013 | 7,431 | |||
2014 | 6,118 | |||
Subsequent to 2014 | 18,426 | |||
Total | $ | 54,757 | ||
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Table of Contents
Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(in thousands) | ||||||||||||
Balance, beginning of year | 16,856 | 16,873 | 16,736 | |||||||||
Vested stock grants | 74 | 36 | 33 | |||||||||
Employee stock purchase plan | 17 | 17 | 15 | |||||||||
Stock options exercised | 41 | 155 | 89 | |||||||||
Treasury shares purchased | (142 | ) | (225 | ) | — | |||||||
Balance, end of year | 16,846 | 16,856 | 16,873 | |||||||||
F-49
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F-50
Table of Contents
Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Stock grants outstanding at beginning of year | 558,049 | 391,866 | 250,149 | |||||||||
Granted | 202,731 | 243,587 | 203,725 | |||||||||
Vested | (104,677 | ) | (63,768 | ) | (40,827 | ) | ||||||
Forfeited | (36,364 | ) | (13,636 | ) | (21,181 | ) | ||||||
Balance at end of year | 619,739 | 558,049 | 391,866 | |||||||||
F-51
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2009 | 2008 | 2007 | ||||||||||||||||||||||
Average | Average | Average | ||||||||||||||||||||||
No. of | Exercise | No. of | Exercise | No. of | Exercise | |||||||||||||||||||
Shares | Prices | Shares | Prices | Shares | Prices | |||||||||||||||||||
Options outstanding at beginning of year | 231,750 | $ | 25.62 | 384,350 | $ | 23.34 | 475,250 | $ | 22.45 | |||||||||||||||
Granted | — | — | — | |||||||||||||||||||||
Exercised | (40,750 | ) | $ | 23.16 | (152,350 | ) | $ | 19.78 | (88,525 | ) | $ | 18.38 | ||||||||||||
Expired or forfeited | — | $ | — | (250 | ) | $ | 29.11 | (2,375 | ) | $ | 29.11 | |||||||||||||
Options outstanding at end of year | 191,000 | $ | 26.21 | 231,750 | $ | 25.67 | 384,350 | $ | 23.34 | |||||||||||||||
Number of options exercisable | 191,000 | $ | 26.21 | 230,250 | $ | 25.62 | 329,600 | $ | 22.12 | |||||||||||||||
Outstanding | Average Remaining | Average | Exercisable | Average | ||||||||||||||||
Price Range | Options | Contract Life | Exercise Price | Options | Exercise Price | |||||||||||||||
$10 to $15 | 6,250 | 0.7 | $ | 10.50 | 6,250 | $ | 10.50 | |||||||||||||
$16 to $20 | 35,500 | 2.2 | $ | 17.45 | 35,500 | $ | 17.45 | |||||||||||||
$21 to $30 | 127,750 | 4.0 | $ | 28.20 | 127,750 | $ | 28.20 | |||||||||||||
$31 to $37 | 21,500 | 5.2 | $ | 33.39 | 21,500 | $ | 33.39 |
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Year Ended December 31, | ||||||||||||||||||||||||
2009 | 2008 | 2007 | ||||||||||||||||||||||
Average | Average | Average | ||||||||||||||||||||||
Exercise | Exercise | Exercise | ||||||||||||||||||||||
SARs | Prices | SARs | Prices | SARs | Prices | |||||||||||||||||||
SARs outstanding at beginning of year | 59,250 | $ | 13.89 | 64,250 | $ | 13.63 | 118,750 | $ | 13.41 | |||||||||||||||
Granted | — | — | — | |||||||||||||||||||||
Exercised | (7,250 | ) | $ | 12.76 | (5,000 | ) | $ | 10.50 | (53,500 | ) | $ | 12.98 | ||||||||||||
Expired or forfeited | — | — | (1,000 | ) | $ | 22.50 | ||||||||||||||||||
SARs outstanding at end of year | 52,000 | $ | 14.05 | 59,250 | $ | 13.89 | 64,250 | $ | 13.63 | |||||||||||||||
Number of SARs exercisable | 52,000 | $ | 14.05 | 59,250 | $ | 13.89 | 64,250 | $ | 13.63 | |||||||||||||||
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March 31, | June 30, | Sept. 30, | Dec. 31, | |||||||||||||
2009 | 2009 | 2009 | 2009 | |||||||||||||
($ in thousands, except net income per share) | ||||||||||||||||
Gross written premiums | $ | 275,259 | $ | 272,729 | $ | 245,191 | $ | 251,739 | ||||||||
Net written premiums | 200,652 | 183,007 | 156,001 | 161,595 | ||||||||||||
Revenues: | ||||||||||||||||
Net earned premiums | 164,946 | 169,868 | 171,271 | 177,278 | ||||||||||||
Commission income | (20 | ) | 55 | 144 | (92 | ) | ||||||||||
Net investment income | 18,743 | 18,656 | 19,110 | 19,003 | ||||||||||||
Total other-than-temporary impairment losses | (26,871 | ) | (1,876 | ) | (22 | ) | (496 | ) | ||||||||
Portion of loss recognized in Other comprehensive income (before tax) | 16,171 | 1,407 | (525 | ) | 335 | |||||||||||
Net other-than-temporary impairment losses recognized in earnings | (10,700 | ) | (469 | ) | (547 | ) | (161 | ) | ||||||||
Net realized gains (losses) | (1,537 | ) | 2,596 | 6,682 | 1,476 | |||||||||||
Other income (expense) | 163 | 5,247 | 1,097 | 71 | ||||||||||||
Total revenues | 171,595 | 195,953 | 197,757 | 197,575 | ||||||||||||
Expenses: | ||||||||||||||||
Net losses and loss adjustment expenses | 100,247 | 100,728 | 107,591 | 127,432 | ||||||||||||
Commission expenses | 22,448 | 26,278 | 22,852 | 27,330 | ||||||||||||
Other operating expenses | 30,535 | 33,019 | 35,018 | 34,099 | ||||||||||||
Interest expense | 2,219 | 2,150 | 2,042 | 2,044 | ||||||||||||
Total expenses | 155,449 | 162,175 | 167,503 | 190,905 | ||||||||||||
Income before income taxes | 16,146 | 33,778 | 30,254 | 6,670 | ||||||||||||
Income tax expense | 4,146 | 10,128 | 8,822 | 594 | ||||||||||||
Net income | $ | 12,000 | $ | 23,650 | $ | 21,432 | $ | 6,076 | ||||||||
Comprehensive income (loss) | $ | 19,503 | $ | 34,876 | $ | 62,119 | $ | (3,186 | ) | |||||||
Combined ratio | 92.8 | % | 92.9 | % | 95.9 | % | 106.5 | % | ||||||||
Net income per common share: | ||||||||||||||||
Basic | $ | 0.71 | $ | 1.40 | $ | 1.26 | $ | 0.36 | ||||||||
Diluted | $ | 0.71 | $ | 1.39 | $ | 1.24 | $ | 0.35 |
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March 31, | June 30, | Sept. 30, | Dec. 31, | |||||||||||||
2008 | 2008 | 2008 | 2008 | |||||||||||||
($ in thousands, except net income per share) | ||||||||||||||||
Gross written premiums | $ | 287,146 | $ | 279,213 | $ | 252,943 | $ | 265,620 | ||||||||
Net written premiums | 187,722 | 174,287 | 140,318 | 159,288 | ||||||||||||
Revenues: | ||||||||||||||||
Net earned premiums | 155,740 | 162,703 | 154,040 | 171,493 | ||||||||||||
Commission income | 261 | 467 | 8 | 269 | ||||||||||||
Net investment income | 18,838 | 18,731 | 19,322 | 19,663 | ||||||||||||
Total other-than-temporary impairment losses | — | (8,412 | ) | (4,748 | ) | (23,885 | ) | |||||||||
Portion of loss recognized in Other comprehensive income (before tax) | — | — | — | — | ||||||||||||
Net other-than-temporary impairment losses recognized in earnings | — | (8,412 | ) | (4,748 | ) | (23,885 | ) | |||||||||
Net realized gains (losses) | (76 | ) | 436 | (768 | ) | (846 | ) | |||||||||
Other income (expense) | 11 | 1,010 | (119 | ) | (472 | ) | ||||||||||
Total revenues | 174,774 | 174,935 | 167,735 | 166,222 | ||||||||||||
Expenses: | ||||||||||||||||
Net losses and loss adjustment expenses | 88,420 | 91,889 | 113,269 | 99,553 | ||||||||||||
Commission expenses | 20,948 | 23,490 | 22,357 | 22,990 | ||||||||||||
Other operating expenses | 29,756 | 33,237 | 30,601 | 29,554 | ||||||||||||
Interest expense | 2,217 | 2,217 | 2,218 | 2,219 | ||||||||||||
Total expenses | 141,341 | 150,833 | 168,445 | 154,316 | ||||||||||||
Income (loss) before income taxes | 33,433 | 24,102 | (710 | ) | 11,906 | |||||||||||
Income tax expense (benefit) | 10,183 | 6,681 | (1,711 | ) | 1,886 | |||||||||||
Net income | $ | 23,250 | $ | 17,421 | $ | 1,001 | $ | 10,020 | ||||||||
Comprehensive income (loss) | $ | 19,556 | $ | 810 | $ | (20,245 | ) | $ | 31,353 | |||||||
Combined ratio | 89.2 | % | 90.4 | % | 107.9 | % | 88.9 | % | ||||||||
Net income per common share: | ||||||||||||||||
Basic | $ | 1.38 | $ | 1.04 | $ | 0.06 | $ | 0.60 | ||||||||
Diluted | $ | 1.36 | $ | 1.03 | $ | 0.06 | $ | 0.59 |
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SUMMARY OF CONSOLIDATED INVESTMENTS—OTHER THAN INVESTMENTS
IN RELATED PARTIES
December 31, 2009
Gross | Gross | OTTI | ||||||||||||||||||
Unrealized | Unrealized | Cost or | Recognized | |||||||||||||||||
December 31, 2009 | Fair Value | Gains | (Losses) | Amortized Cost | in OCI | |||||||||||||||
($ in thousands) | ||||||||||||||||||||
U.S. Government Treasury bonds, agency bonds and foreign government bonds | $ | 471,598 | $ | 7,397 | $ | (597 | ) | $ | 464,798 | $ | — | |||||||||
States, municipalities and political subdivisions | 676,699 | 25,044 | (2,917 | ) | 654,572 | — | ||||||||||||||
Mortgage- and asset-backed securities: | ||||||||||||||||||||
Agency mortgage-backed securities | 283,578 | 12,607 | (98 | ) | 271,069 | — | ||||||||||||||
Residential mortgage obligations | 31,071 | — | (7,246 | ) | 38,317 | (5,723 | ) | |||||||||||||
Asset-backed securities | 16,469 | 612 | (34 | ) | 15,891 | (23 | ) | |||||||||||||
Commercial mortgage-backed securities | 100,393 | 594 | (5,028 | ) | 104,827 | — | ||||||||||||||
Subtotal | 431,511 | 13,813 | (12,406 | ) | 430,104 | (5,746 | ) | |||||||||||||
Corporate bonds | 236,861 | 9,111 | (759 | ) | 228,509 | — | ||||||||||||||
Total fixed maturities | 1,816,669 | 55,365 | (16,679 | ) | 1,777,983 | (5,746 | ) | |||||||||||||
Equity securities — common stocks | 62,610 | 15,244 | (10 | ) | 47,376 | — | ||||||||||||||
Cash | 509 | — | — | 509 | — | |||||||||||||||
Short-term investments | 176,799 | — | — | 176,799 | — | |||||||||||||||
Total | $ | 2,056,587 | $ | 70,609 | $ | (16,689 | ) | $ | 2,002,667 | $ | (5,746 | ) | ||||||||
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THE NAVIGATORS GROUP, INC.
(Parent Company)
($ in thousands, except share data)
December 31, | ||||||||
2009 | 2008 | |||||||
ASSETS | ||||||||
Cash and investments | $ | 63,676 | $ | 52,149 | ||||
Investments in subsidiaries | 846,295 | 751,864 | ||||||
Goodwill and other intangible assets | 2,534 | 2,534 | ||||||
Other assets | 5,213 | 8,769 | ||||||
Total assets | $ | 917,718 | $ | 815,316 | ||||
LIABILITIES | ||||||||
7% Senior Notes | $ | 114,010 | $ | 123,794 | ||||
Accounts payable and other liabilities | 847 | 747 | ||||||
Accrued interest payable | 1,342 | 1,458 | ||||||
Total liabilities | 116,199 | 125,999 | ||||||
STOCKHOLDERS’ EQUITY | ||||||||
Preferred stock, $.10 par value, 1,000,000 shares authorized, none issued | — | — | ||||||
Common stock, $.10 par value, 50,000,000 shares authorized: authorized; issued 17,212,814 shares for 2009 and 17,080,826 for 2008 | 1,721 | 1,708 | ||||||
Additional paid-in capital | 304,505 | 298,872 | ||||||
Treasury stock, at cost (366,330 shares for 2009 and 224,754 shares 2008) | (18,296 | ) | (11,540 | ) | ||||
Retained earnings | 469,934 | 406,776 | ||||||
Accumulated other comprehensive income: | ||||||||
Net unrealized gains (losses) on securities available-for-sale, net of tax | 34,958 | (15,062 | ) | |||||
Foreign currency translation adjustment, net of tax | 8,697 | 8,563 | ||||||
Total stockholders’ equity | 801,519 | 689,317 | ||||||
Total liabilities and stockholders’ equity | $ | 917,718 | $ | 815,316 | ||||
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THE NAVIGATORS GROUP, INC.
(Parent Company)
($ in thousands)
Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Revenues: | ||||||||||||
Net investment income | $ | 583 | $ | 1,354 | $ | 1,877 | ||||||
Dividends received from wholly-owned subsidiaries | 25,000 | 20,000 | 8,000 | |||||||||
Total revenues | 25,583 | 21,354 | 9,877 | |||||||||
Expenses: | ||||||||||||
Interest expense | 8,455 | 8,871 | 8,863 | |||||||||
Other (income) expense | (1,482 | ) | 1,016 | (1,996 | ) | |||||||
Total expenses | 6,973 | 9,887 | 6,867 | |||||||||
Income before income tax benefit | 18,610 | 11,467 | 3,010 | |||||||||
Income tax benefit | (2,174 | ) | (3,495 | ) | (1,804 | ) | ||||||
Income before equity in undistributed net income of wholly owned subsidiaries | 20,784 | 14,962 | 4,814 | |||||||||
Equity in undistributed net income of wholly-owned subsidiaries | 42,374 | 36,730 | 90,806 | |||||||||
Net income | $ | 63,158 | $ | 51,692 | $ | 95,620 | ||||||
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THE NAVIGATORS GROUP, INC.
(Parent Company)
($ in thousands)
Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Operating activities: | ||||||||||||
Net income | $ | 63,158 | $ | 51,692 | $ | 95,620 | ||||||
Adjustments to reconcile net income to net cash provided by (used in) operations: | ||||||||||||
Equity in undistributed net income of wholly-owned subsidiaries | (42,374 | ) | (56,730 | ) | (98,806 | ) | ||||||
Dividends received from subsidiaries | 25,000 | 20,000 | 8,000 | |||||||||
Other | (20,318 | ) | 604 | 4,792 | ||||||||
Net cash provided by operating activities | 25,466 | 15,566 | 9,606 | |||||||||
Investing activities: | ||||||||||||
Fixed maturities, available-for-sale | ||||||||||||
Sales | 9,103 | 9,637 | — | |||||||||
Purchases | (34,932 | ) | (13,500 | ) | 10,500 | |||||||
Net (increase) decrease in short-term investments | 13,863 | 2,432 | (20,497 | ) | ||||||||
Net cash used in investing activities | (11,966 | ) | (1,431 | ) | (9,997 | ) | ||||||
Financing activities: | ||||||||||||
Capital contribution | (2,000 | ) | — | — | ||||||||
Purchase of treasury stock | (6,756 | ) | (11,540 | ) | — | |||||||
Purchase of Senior notes | (7,000 | ) | — | — | ||||||||
Proceeds of stock issued from employee stock purchase plan | 727 | 963 | 606 | |||||||||
Proceeds of stock issued from exercise of stock options | 944 | 3,014 | 1,627 | |||||||||
Net cash provided by (used in) financing activities | (14,085 | ) | (7,563 | ) | 2,233 | |||||||
Increase (decrease) in cash | (585 | ) | 6,572 | 1,842 | ||||||||
Cash at beginning of year | 9,675 | 3,103 | 1,261 | |||||||||
Cash at end of year | $ | 9,090 | $ | 9,675 | $ | 3,103 | ||||||
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SUPPLEMENTARY INSURANCE INFORMATION
($ in thousands)
Reserve | Losses | Amortization | ||||||||||||||||||||||||||||||||||||||
Deferred | for losses | Other policy | and loss | of deferred | ||||||||||||||||||||||||||||||||||||
policy | and loss | claims and | Net | Net | adjustment | policy | Other | Net | ||||||||||||||||||||||||||||||||
acquisition | adjustment | Unearned | benefits | earned | investment | expenses | acquisition | operating | written | |||||||||||||||||||||||||||||||
costs | expenses | premiums | payable | premiums | income(1) | incurred | costs(2) | expenses(1) | premiums | |||||||||||||||||||||||||||||||
Year ended December 31, 2009 | ||||||||||||||||||||||||||||||||||||||||
Insurance Companies | $ | 34,872 | $ | 1,395,876 | $ | 334,798 | $ | — | $ | 479,121 | $ | 65,717 | $ | 304,672 | $ | 61,949 | $ | 104,801 | $ | 477,673 | ||||||||||||||||||||
Lloyd’s Operations | 21,703 | 524,410 | 140,373 | — | 204,242 | 9,229 | 131,326 | 37,727 | 27,896 | 223,582 | ||||||||||||||||||||||||||||||
$ | 56,575 | $ | 1,920,286 | $ | 475,171 | $ | — | $ | 683,363 | $ | 74,946 | $ | 435,998 | $ | 99,676 | $ | 132,697 | $ | 701,255 | |||||||||||||||||||||
Year ended December 31, 2008 | ||||||||||||||||||||||||||||||||||||||||
Insurance Companies | $ | 33,308 | $ | 1,359,231 | $ | 348,824 | $ | — | $ | 463,298 | $ | 63,544 | $ | 275,767 | $ | 55,752 | $ | 92,297 | $ | 472,688 | ||||||||||||||||||||
Lloyd’s Operations | 14,310 | 494,433 | 131,841 | — | 180,678 | 11,655 | 117,364 | 34,033 | 30,961 | 188,927 | ||||||||||||||||||||||||||||||
$ | 47,618 | $ | 1,853,664 | $ | 480,665 | $ | — | $ | 643,976 | $ | 75,199 | $ | 393,131 | $ | 89,785 | $ | 123,258 | $ | 661,615 | |||||||||||||||||||||
Year ended December 31, 2007 | ||||||||||||||||||||||||||||||||||||||||
Insurance Companies | $ | 30,840 | $ | 1,201,595 | $ | 336,261 | $ | — | $ | 443,456 | $ | 58,261 | $ | 256,652 | $ | 52,490 | $ | 81,053 | $ | 478,018 | ||||||||||||||||||||
Lloyd’s Operations | 21,055 | 447,169 | 133,220 | — | 158,521 | 10,524 | 83,940 | 25,123 | 29,356 | 167,778 | ||||||||||||||||||||||||||||||
$ | 51,895 | $ | 1,648,764 | $ | 469,481 | $ | — | $ | 601,977 | $ | 68,785 | $ | 340,592 | $ | 77,613 | $ | 110,409 | $ | 645,796 | |||||||||||||||||||||
(1) | Net investment income and Other operating expenses reflect only such amounts attributable to the Company’s insurance operations. | |
(2) | Amortization of deferred policy acquisition costs reflects only such amounts attributable to the Company’s insurance operations. A portion of these costs is eliminated in consolidation. |
S-5
Table of Contents
REINSURANCE
($ in thousands)
Ceded to | Assumed | Percentage | ||||||||||||||||||
Direct | other | from other | Net | of amount | ||||||||||||||||
Amount | companies | companies | amount | assumed to net | ||||||||||||||||
Year ended December 31, 2009 | ||||||||||||||||||||
Property-Casualty | $ | 966,251 | $ | 343,663 | $ | 78,667 | $ | 701,255 | 11 | % | ||||||||||
Year ended December 31, 2008 | ||||||||||||||||||||
Property-Casualty | $ | 1,016,521 | $ | 423,307 | $ | 68,401 | $ | 661,615 | 10 | % | ||||||||||
Year ended December 31, 2007 | ||||||||||||||||||||
Property-Casualty | $ | 989,652 | $ | 424,911 | $ | 81,055 | $ | 645,796 | 13 | % | ||||||||||
S-6
Table of Contents
VALUATION AND QUALIFYING ACCOUNTS
($ in thousands)
Balance at | Balance at | |||||||||||||||||||
January 1, | Charged (Credited) to | Charged to | Deductions | December 31, | ||||||||||||||||
Description | 2009 | Costs and Expenses | Other Accounts | (Describe) | 2009 | |||||||||||||||
Allowance for uncollectible reinsurance | $ | 11,805 | $ | 1,994 | $ | — | $ | — | $ | 13,799 | ||||||||||
Valuation allowance in deferred taxes | $ | 6,194 | $ | (3,546 | ) | $ | — | $ | — | $ | 2,648 | |||||||||
S-7
Table of Contents
SUPPLEMENTARY INFORMATION CONCERNING PROPERTY-CASUALTY INSURANCE OPERATIONS
($ in thousands)
Reserve | Amortization | |||||||||||||||||||||||||||||||||||||||||||
Deferred | for losses | Losses and loss adjustment | of deferred | |||||||||||||||||||||||||||||||||||||||||
Affiliation | policy | and loss | Discount, | Net | Net | expenses incurred related to | policy | Other | Net | |||||||||||||||||||||||||||||||||||
with | acquisition | adjustment | if any, | Unearned | earned | investment | Current | Prior | acquisition | operating | written | |||||||||||||||||||||||||||||||||
Registrant | costs | expenses | deducted | premiums | premiums | income(1) | year | years | costs(2) | expenses(1) | premiums | |||||||||||||||||||||||||||||||||
Consolidated Subsidiaries | ||||||||||||||||||||||||||||||||||||||||||||
Year ended December 31, 2009 | $ | 56,575 | $ | 1,920,286 | $ | — | $ | 475,171 | $ | 683,363 | $ | 74,946 | $ | 444,939 | $ | (8,941 | ) | $ | 99,676 | $ | 132,697 | $ | 701,255 | |||||||||||||||||||||
Year ended December 31, 2008 | $ | 47,618 | $ | 1,853,664 | $ | — | $ | 480,665 | $ | 643,976 | $ | 75,199 | $ | 443,877 | $ | (50,746 | ) | $ | 89,785 | $ | 123,258 | $ | 661,615 | |||||||||||||||||||||
Year ended December 31, 2007 | $ | 51,895 | $ | 1,648,764 | $ | — | $ | 469,481 | $ | 601,977 | $ | 68,785 | $ | 387,601 | $ | (47,009 | ) | $ | 77,613 | $ | 110,409 | $ | 645,796 | |||||||||||||||||||||
(1) | Net investment income and Other operating expenses reflect only such amounts attributable to the Company’s insurance operations. | |
(2) | Amortization of Deferred policy acquisition costs reflects only such amounts attributable to the Company’s insurance operations. A portion of these costs is eliminated in consolidation. |
S-8
Table of Contents
Previously Filed and | |||||
Incorporated Herein | |||||
Exhibit No. | Description of Exhibit | by Reference to: | |||
3-1 | Restated Certificate of Incorporation | Form S-8 filed July 26, 2002 (File No. 333-97183) | |||
3-2 | Certificate of Amendment to the Restated Certificate of Incorporation | Form S-8 filed July 26, 2002 (File No. 333-97183) | |||
3-3 | By-laws, as amended | Form S-1 (File No. 33-5667) | |||
3-4 | Certificate of Amendment to the Restated Certificate of Incorporation | Form 10-Q for June 30, 2006 | |||
4-1 | Specimen of Common Stock certificate, par value $0.10 per share | Form S-8 filed June 20, 2003 (File No. 333-106317) | |||
10-1 | Management Agreement between Navigators Insurance Company and Navigators Management Company, Inc. (formerly Somerset Marine, Inc.) | Form S-1 (File No. 33-5667) | |||
10-2 | Agreement between the Company and Navigators Management Company, Inc. (formerly Somerset Marine, Inc.) | Form S-1 (File No. 33-5667) | |||
10-3 | * | Stock Option Plan | Form S-1 (File No. 33-5667) | ||
10-4 | * | Non-Qualified Stock Option Plan | Form S-4 (File No. 33-75918) | ||
10-5 | Agreement with Bradley D. Wiley dated June 3, 1997 | Form 10-K for December 31, 1997 | |||
10-6 | Employment Agreement with Salvatore A. Margarella dated March 1, 1999 | Form 10-K for December 31, 1998 | |||
10-7 | Employment Agreement with Stanley A. Galanski effective March 26, 2001 | Form 10-Q for March 31, 2001 | |||
10-8 | Employment Agreement with R. Scott Eisdorfer dated September 1, 1999 | Form 10-K for December 31, 2002 | |||
10-9 | * | 2002 Stock Incentive Plan | Proxy Statement for May 30, 2002 | ||
10-10 | * | Employee Stock Purchase Plan | Proxy Statement for May 29, 2003 | ||
10-11 | * | Executive Performance Incentive Plan | Proxy Statement for May 29, 2003 | ||
10-12 | Form of Indemnity Agreement by the Company and the Selling Stockholders (as defined therein) | Amendment No. 2 to Form S-3 dated October 1, 2003 (File No. 333-108424) | |||
10-14 | Form of Stock Grant Award Certificate and Restricted Stock Agreement for the 2002 Stock Incentive Plan (approved at Annual Meeting of Shareholders held May 30, 2002) | Form 10-Q for September 30, 2004 | |||
10-15 | Form of Option Award Certificate for the 2002 Stock Incentive Plan (approved at Annual Meeting of Shareholders held May 30, 2002) | Form 10-Q for September 30, 2004 | |||
10-16 | Agreement with Jane E. Keller | Form 10-Q for September 30, 2004 | |||
10-17 | Common Stock Grant Award to Stanley A. Galanski under the 2002 Stock Incentive Plan | Form 8-K filed December 14, 2004 | |||
10-18 | Commutation Agreement between Navigators Insurance Company and Somerset Insurance Limited | Form 8-K filed January 18, 2005 | |||
10-19 | Second Amended and Restated Credit Agreement among the Company and the Lenders dated January 31, 2005 | Form 8-K filed February 4, 2005 | |||
10-20 | * | 2005 Stock Incentive Plan | Proxy Statement for May 20, 2005 | ||
10-23 | Third Amended and Restated Credit Agreement among the Company and the Lenders dated February 2, 2007 | Form 8-K filed February 7, 2007 |
Table of Contents
Previously Filed and | |||||
Incorporated Herein | |||||
Exhibit No. | Description of Exhibit | by Reference to: | |||
10-24 | Paul J. Malvasio Letter Agreement and Retirement Agreement | Form 10-Q for March 31, 2008 | |||
10-25 | Agreement with Francis W. McDonnell | Form 8-K filed July 29, 2008 | |||
10-26 | Fourth Amended and Restated Credit Agreement among the Company and the Lender dated April 3, 2009 | Form 8-K filed April 7, 2009 | |||
10-27 | * | Amended 2005 Stock Incentive Plan | Proxy Statement for April 29, 2009 | ||
10-28 | Agreement with Bruce J. Byrnes | Form 8-K filed June 16, 2009 | |||
11-1 | Statement re Computation of Per Share Earnings | ** | |||
21-1 | Subsidiaries of Registrant | ** | |||
23-1 | Consent of Independent Registered Public Accounting Firm | ** | |||
31-1 | Certification of CEO per Section 302 of the Sarbanes-Oxley Act | ** | |||
31-2 | Certification of CFO per Section 302 of the Sarbanes-Oxley Act | ** | |||
32-1 | Certification of CEO per Section 906 of the Sarbanes-Oxley Act (This exhibit is intended to be furnished in accordance with regulation S-K item 601(b)(32)(ii) and shall not be deemed to be filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference into any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference). | ** | |||
32-2 | Certification of CFO per Section 906 of the Sarbanes-Oxley Act (This exhibit is intended to be furnished in accordance with regulation S-K item 601(b)(32)(ii) and shall not be deemed to be filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference into any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference). | ** |
* | Compensatory plan. | |
** | Included herein. |